The Toronto stock market settled into the red Wednesday, despite after a report showing signs of strong economic performance in China raised hopes that demand will pick up for oil and metals and boost energy and mining stocks on the resource-heavy TSX.
The S&P TSX Composite Index slipped 66.54 points on the day to 11,450.64
The July crude contract on the New York Mercantile Exchange rose, following a report that Chinese exports grew 50% in May from a year earlier, well above expectations of a 32% rise.
Also, new loans during May beat analyst estimates.
Official data from the Chinese government is to be released on Thursday.
Oil prices were also lifted by data from the U.S. Energy Information Administration which said oil stockpiles decreased by 1.8 million barrels in the week ended June 4th, which was in line with expectations.
The TSX energy sector was ahead as Suncor Energy rose 54 cents to $32.49, although Canadian Natural Resources sank 50 cents to $35.72.
The base metals sector gained strength as copper prices also jumped following the Chinese report. The July copper contract on the Nymex was up eight cents to $2.86 U.S. a pound. Teck Resources settled back 38 cents to $32.35 and Quadra FNX Mining lost four cents to $11.46.
Commodity prices have been under heavy pressure amid worries that demand will be weakened by the European debt crisis, a slowing Chinese economy and renewed doubts about the U.S. economic recovery following disappointing jobs data for May.
Industrial stocks were also supportive with Canadian National Railways ahead 15 cents to $59.44.
Among gold stocks, Barrick Gold Corp. faded 98 cents to $44.51.
The euro moved up to $1.2055 U.S. The euro has touched a series of four-year lows in recent days on worries about Europe’s weak growth prospects and the economic effects of deep cuts in public spending announced by major European nations, including Germany and Britain.
In corporate news, sporting goods retailer Forzani Group Ltd. said Tuesday it narrowed its first-quarter loss as same-store sales grew by 9.8%. Forzani’s loss was $691,000 or two cents per share, compared to $1.1 million or four cents per share a year ago. Revenue was $228.0 million, up from $201.3 million in the first quarter of fiscal 2010. Forzani shares gained 65 cents to $16.90.
Grande Cache Coal Corp. saw its fourth-quarter profit fall dramatically, despite higher volumes, as the average price per tonne of coal fell by about two-thirds compared with the same time last year. Its net income dropped to $1.4 million for the three months ended March 31, from $18.9 million a year earlier, even though revenue increased by 31% to $50.8 million and its shares gained 38 cents to $5.27.
Western Coal Corp. is offering to exchange common shares for the 45% of Energybuild Group PLC that it doesn’t already own in a deal that values the U.K. company at about $82.1 million.
Energybuild is developing the Aberpergwm mine and anthracite coal reserves in Wales. Western Coal shares gained 16 cents to $4.61.
Crystallex International Corporation plans to raise $35 million in a bought-deal financing with a group of underwriters led by Macquarie Capital Markets Canada Ltd. and including GMP Securities L.P.
The net proceeds from the offering are intended to be used for its Las Cristinas gold mining project in Venezuela, debt service and for general working capital purposes. Its shares were down three cents to 44.5 cents.
Uranium giant Cameco Corp. plans to invest in its own portfolio of properties over the next several years, rather than ramp up acquisitions, in a cost-effective attempt to boost production. Chief financial officer Kim Goheen said that the company plans to make "significant investments" to expand production at mines in which it already has a stake. Cameco shares were down 60 cents to $23.27.
In economic news, the Conference Board of Canada said Canadian companies saw their profitability outlook weaken for a second month in May. A leading indicator, which tracks profits across a variety of industries, fell 0.4% in May from the previous month. However, it noted the indexes of trucking and wholesale trade sectors were showing strong growth.
The Canadian dollar picked up 0.39 cents to 95.75 cents U.S.
ON BAYSTREET
Eight of the 14 TSX subgroups ended lower. Gold thudded 2.9%, while materials and financials each slipped 1.1%.
The half-dozen gainers were led by health-care and industrial issues, each up 0.5% and the metals and mining group, up 0.4%.
The TSX Venture Exchange gave back 7.65 points to 1,444.01, while the Nasdaq Canada index moved 6.21 points lower to 657.43.
ON WALLSTREET
In New York, stocks gave up gains and slipped into the red in the last hours of trade as investors ditched earlier optimism on Federal Reserve chairman's comments that Europe's debt crisis will only have a "modest" impact on the U.S. economy.
The Dow Jones industrial average sank 40.73 points to 9,899.25, after triple-digit gains throughout much of the day.
The S&P 500 index shed 6.31 points to 1,055.69. The Nasdaq composite index tumbled 11.72 points to 2,158.85.
After a choppy session, stocks rallied during the last hour of trade Tuesday, with the Dow Jones industrial average and S&P 500 ending higher thanks to a spike in commodity and financial shares. The Nasdaq also erased most losses to end just three points lower in the session.
Stocks extended Tuesday's 11th-hour spike, with the Dow logging triple-digit gains, but the rally lost steam in the late afternoon.
The session’s earlier gains were supported by Bernanke's comments that Europe's financial woes should have a limited impact on the U.S. economy.
Investors are relieved to hear that the region's troubles likely won't derail the U.S. recovery, although concerns about Europe will likely resurface again, said one expert.
Bernanke also urged lawmakers to make plans to reduce the nation's own deficit.
Economically speaking, the Federal Reserve's "beige book," a reading on activity in the nation's 12 economic districts, showed that economic activity continued to improve in May, though many districts reported only modest growth.
A report from the Department of Commerce showed that wholesale inventories rose 0.4% in April, below analysts' expectations of a 0.5% increase.
Treasury prices dropped in strength, raising the yield on the 10-year note to 3.19% from Tuesday’s 3.17%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil improved $1.94 to $73.93 U.S.
Gold prices moved up four dollars to $1,234 U.S. an ounce
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