Apr. 6, 2009 (Baystreet.ca) --
12:40 pm EST
Stock markets were negative midmorning Monday as investors took some profits from a four-week-old rally amid the apparent collapse of IBM Corp.'s acquisition of Sun Microsystems Inc.
Toronto's S&P/TSX composite index tumbled 141.33 points lower by noon to 8,924.43
The rally which started March 10, initially on good news from the American financial sector and bolstered since then by a string of positive economic data, had sent the TSX up 20% while the Dow is up about 22.5% since both hit multi-year lows on March 9.
The TSX energy sector fell as oil prices retreated. Suncor Inc. gave back 57 cents to $29.22 while Canadian Natural Resources moved down 54 cents to $52.97.
The gold sector was down, as Goldcorp Inc. faded $1.82 to $36.28.
The base metals sector dipped, with Sherritt International down 10 cents to $3.37.
Shares in Teck Cominco Ltd. moved up 30 cents to $8.75 after it announced it has sold an interest in the gold production at its Andacollo mine in Chile to Royal Gold. The Vancouver-based mining giant said the deal is valued at $300 million U.S.
Sources told the Globe and Mail that the deal is one of several moves the company plans take in order to reduce its huge debt burden. It says the company will sell off more than $2 billion U.S. in asset sales, and mount a debt restructuring and a potential equity issue.
Canada's largest base metals miner is struggling to reduce the enormous debt load it incurred from its top-of-the-market, $14-billion-U.S. takeover of Fording Canadian Coal Trust last year.
Canadian investors also took in another deal gone bad. The takeover of Allen-Vanguard Corp. by Tailwind Financial in an all-stock deal worth $41.6 million has fallen through. The Ottawa-based maker of bomb disposal equipment and other military hardware said Monday another deal to take the company private is being considered and its shares were down half a cent to 15 cents.
WestJet Airlines Ltd. shares were off 13 cents to $12.12 after the carrier said it filled 81.9% of its seats last month, down from a load factor of 86.6% in March 2008 which included Easter holiday travel.
The airline reported Monday that it added 6.3% to its capacity over a year ago, to 1.52 billion available seat miles.
Shares in Potash Corp. moved down $2.25 to $102.84 after unionized workers at its Lanigan mine ratified a new contract. Their union says wages will rise 18% over three years, generally, and certain jobs will have an even bigger increase.
Mega Brands Inc. shares plunged 12 cents or 22.6% to 41 cents after the toymaker said a tough sales environment coupled with significant impairment charges to its goodwill resulted in deeper fourth-quarter and full-year losses. The Montreal-based company reported a quarterly loss of $323.3 million U.S., compared with a loss of $66.2 million in the prior-year period.
On the economic front, Statistics Canada reported a sharp drop in the value of building permits issued during February.
The agency reported that the value of permits fell 15.9% to $3.7 billion in February. It said the drop was mainly due to a 30.5% plunge in the value of non-residential building permits, particularly in Ontario.
The Canadian dollar was down 0.87 cents to 80.41 cents U.S.
ON BAYSTREET
Of the 13 TSX subgroups, 11 were still to the downside. Gold tailed off 3.1%, followed closely by metals and mining, and metals and mining, off 2.7%.
Of the two groups that gained, information technology had the bigger boost, at 1.5%, while consumer staples squeaked ahead 0.1%.
The TSX Venture Exchange slid a further 10.25 points to 956.34 while the Nasdaq Canada Index reversed course and advanced 14.09 points to approach noon at 588.20
ON WALLSTREET
The Dow Jones Industrials average fell 132.93 points to 7,884.61
The S&P 500 index retreated 17.31 points to 830.40, while the Nasdaq gave back 36 points to 1,585.88.
IBM and Sun were going over final details of a deal that would have seen IBM pay about $7 billion U.S. to acquire Sun but IBM pulled the offer this weekend and Sun ended "Big Blue"'s status as its exclusive negotiating partner.
It was unclear whether talks were continuing, or if Sun was trying to find an alternative suitor to IBM. Sun shares tumbled $1.93 or almost 23% to $6.56 U.S. while IBM pulled back $1.31 to $100.91 U.S.
General Motors chief Fritz Henderson said Sunday on NBC's "Meet the Press" that the beleaguered automaker was working to avoid bankruptcy, but warned that bankruptcy did remain a possibility.
Ford Motor Co. shares surged 46 cents or 14% to $3.71 U.S. in New York after it said it completed a tender offer announced last month, reducing its debt by $9.9 billion U.S.
MGM Mirage is reportedly considering the sale of two of its most reliable casino operations in an effort to raise cash, according to the Wall Street Journal.
Aluminum giant Alcoa kicks off the U.S. first-quarter earnings season Tuesday. Expectations for corporate earnings are low and investors will focus on their forecasts for the remainder of the year.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.90% from 2.89% Friday. Treasury prices and yields move in opposite directions.
The May crude contract on the New York Mercantile Exchange moved down $1 to $51.51 U.S. a barrel.
The May bullion contract in New York declined $26.20 to $871.10 U.S. an ounce