The Toronto stock market registered a solid gain Monday afternoon as mining and energy stocks benefited from a rally in commodity prices following steep losses last week, while the TSX also found lift from major buying activity in the retail sector.
The S&P/TSX Composite Index gained 110.53 points to end the day at 13,677.13
The consumer discretionary sector rose after Canadian Tire announced plans to buy Forzani Group Ltd, the company behind major sporting goods retailers like Sport Chek and Athletes World in a deal worth $771 million. The transaction is valued at $26.50 per share, which is a 50% premium on the closing price of Forzani’s stock on Friday.
Forzani shares soared $8.64 to $26.25 while Canadian Tire rose $1.60 to $60.19 following the announcement of the all-cash deal.
Oil prices jumped as improved hopes over the U.S. economic recovery helped lower fears of much lower demand. Suncor Energy rose 35 cents to $40.61 while Imperial Oil advanced 21 cents to $46.86
Gold stocks such as Barrick Gold Corp. were ahead 54 cents to $45.96 while Goldcorp Inc. improved by $1.02 to $48.38.
The base metals sector gained while the July copper contract in New York was up four cents to $4.02 U.S. a pound. Quadra FNX Mining gained 23 cents to $13.98 while First Quantum was ahead $3.78 to $127.50.
First Quantum, which keeps its books in U.S. dollars, reported that it earned $206.7 million attributable to shareholders in its latest quarter, up from $150.3 million in the first three months of 2010.
Market heavyweight Research In Motion Ltd. weighed on the TSX and the BlackBerry maker’s shares fell $1.17 to $43.39.
In other earnings news, Silver Wheaton Corp. said first-quarter net earnings grew 142% to $122.2 million U.S. from $50.6 million a year earlier. Revenue jumped to a record $158.2 million from $85.9 million and its shares gained 83 cents to $35.47.
Valeant Pharmaceuticals posted a $6.5-million profit in the first quarter as the drug developer’s revenue more than doubled, largely as a result of last year’s merger with Biovail.
The earnings reversed last year’s loss of $3.1 million and its shares advanced $1.37 to $50.04.
In other corporate news, Bombardier Inc. shares were up 24 cents to $6.91 after its Bombardier Transportation division signed a framework agreement with Siemens AG for a $3-billion U.S. share of a large German high-speed rail contract.
Investors also focused on Europe after credit rating agency Standard & Poor's lowered Greece's bond grade further into junk status because of risks that the country will have to negotiate an extension on its debt repayments.
The Canadian dollar lost early momentum after S&P lowered Greece's bond long-term bond grade on Monday by two notches to B from BB-, with "negative implications" for future efforts to improve public finances. The Canadian dollar gained 0.43 cents to 103.84 cents U.S.
On the economic front, there was some negative data from the housing sector. Canada Mortgage and Housing Corp. reported that housing starts fell to 179,000 in April, down from 185,000 and below the 183,000 level that economists had expected.
ON BAYSTREET
The TSX Venture Exchange vaulted 31.15 points to 2,119.75 while the Nasdaq Canada index poked into the green 1.47 points by the final bell to 682.93
In Toronto, all 14 subgroups moved forward. Health-care and global base metal stocks each advanced 2.1%, while the materials group was up 1.5%.
ON WALLSTREET
In New York, stocks closed higher Monday as commodity prices regained ground, overshadowing worries about the fiscal crisis in Greece hung over the market.
The Dow Jones industrial average added 45.94 points to 12,684.70
The S&P 500 gained 6.09 points to 1,346.29. The Nasdaq Composite Index added 15.69 points to 2,843.25
After a sharp selloff last week, commodities rebounded Monday. Oil jumped 5% to above $102 U.S. a barrel. Silver prices gained 6% and gold rose over 1%.
Shares of Alcoa, Caterpillar and Chevron were among the top performers on the Dow. McDonald's rose nearly 1% after the fast-food chain said sales rose 6% in April.
But the blue-chip average was hobbled by shares of Intel, which fell nearly 2%. Bank of America and JPMorgan were also weak.
Citigroup conducted a 1-for-10 reverse stock split after the closing bell Friday, meaning that the number of shares outstanding was reduced to bolster the stock price. Citi's stock edged lower in early trading to $44.75 U.S. Last week, it was trading at around $4.50 U.S. a share.
Citi shares fell 1%.
Shares of Dollar Thrifty surged nearly 12% after Hertz announced a new offer to buy the rival rental car company.
Tyson Foods reported earnings per share that beat analysts' estimates by a penny, but the company missed on revenue. Shares fell 6%.
Standard & Poor's cut Greece's credit rating again, and warned that many of the nation's banks are at risk of further downgrades. That came on the heels of rumours last week that the debt-ridden country could abandon the euro or seek another bailout.
On the economic front, U.S. consumer credit markets made more progress down the road to recovery, according to a report released Monday by the Federal Reserve Bank of New York.
The report shows credit limits increased for the first time since the third quarter of 2008, rising $30 billion U.S. or about 1%
Among the key reports due later in the week are the March trade balance, due Wednesday, the April retail sales figures on Thursday and a reading on April consumer prices slated for Friday.
The price on the benchmark 10-year U.S. Treasury gained ground, lowering yields to 3.14% from Friday’s 3.16%. Treasury prices and yields move in opposite directions.
Oil for June delivery gained $5.51 to $102.69 U.S. a barrel.
Gold futures for June delivery rose $16.70 to close at $1,507.90 U.S. an ounce.
Silver futures for July delivery rose $2.18 to end at $37.47 U.S. an ounce
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