The Toronto stock market lost early momentum Tuesday even as commodity prices rose sharply in the wake of data indicating that China is managing to avoid an abrupt economic slowdown.
The S&P TSX Composite Index ended the day down 25.77 points to 12,232.83.
The Canadian dollar rose 0.24 cents to 98.48 cents U.S., after the Bank of Canada announced it was keeping its trendsetting policy rate at 1% for another two months and raised its prediction for 2012 economic growth slightly to 2%.
The central bank says economic conditions around the world are deteriorating, but not necessarily for Canada.
A growing Chinese economy has been an important source of support for a struggling global economy and, in particular, has boosted prices for oil and metals and in turn energy and mining stocks on the resource-heavy TSX.
The Chinese data (see below) sent commodity prices up sharply with the energy sector gaining ground. Suncor Energy was up 29 cents to $33.23.
The base metals sector gained as March copper gained seven cents to $3.71 U.S. a pound. Teck Resources climbed 19 cents to $39.84.
The gold sector was weak as Barrick Gold Corp. lost $1.08 to $48.70.
Kinross Gold Corp. was the biggest loser. Its shares tumbled $2.84 or 21.5% to $10.36 after it said soaring costs at the Tasiast mine in Africa will require months of delay. It will also result in a writedown of at least some of the goodwill related to the company’s $7.1-billion U.S. purchase of Red Back Mining in 2010.
The tech sector gained strength, though, as Research In Motion Ltd. spiked 87 cents, or 5.2%, to $17.73.
There was some major Canadian deal making in the real estate business.
Commercial property owner Dundee Real Estate Investment Trust is buying Whiterock REIT in a transaction valued at $582.1 million. The move combines two of Canada’s most prominent commercial and industry property owners, giving shareholders either $16.25 in cash or 0.4729 Dundee REIT units.
Dundee units fell $1.14 to $33.93 while Whiterock jumped $1.78, or 12.5%, to $16.08.
Valeant Pharmaceuticals is sweetening its hostile bid for Irvine, Calif.,-based ISTA Pharmaceuticals Inc. Valeant’s new offer raises its earlier bid by a dollar to $7.50 U.S. per share.
And the Mississauga, Ont.,-based pharmaceutical company says it might pay even more, up to $8.50 U.S. a share, if ISTA agrees to a week-long period of due diligence. Valeant stock improved by 86 cents to $51.82.
Elsewhere on the economic front, Statistics Canada reported this morning that foreign investment in Canadian securities strengthened in November with non-residents adding $15.0 billion to their holdings, the largest such inflow of funds since May.
On the other side of the coin, Canadian investors purchased $2.8 billion of foreign securities, evenly split between stocks and bonds.
ON BAYSTREET
The TSX Venture Exchange shaved off 1.21 points to 1,536.72, while the Nasdaq Canada index grew 10.59 points to 403.42
Nine of the 14 Toronto subgroups remained positive on the day. Global base metals and information technology advanced 1.3% each, while industrials picked up 0.8%.
The five laggards were weighed by gold stocks, sliding 2.4%, materials, off 2.1%, and health-care issues, ailing 0.9%.
ON WALLSTREET
In New York, stocks started the week higher Tuesday, as investors welcomed several signs of improving global economic growth.
The Dow Jones Industrials gained 60.01 points, to close at 12,482.10
The S&P 500 added 4.53 points to 1,293.62, while the Nasdaq Composite gained 17.41 points to 2,728.08. All three major indexes pulled back in afternoon trading after inking big gains during the first half of the trading day.
Two major banks, Citigroup and Wells Fargo, released their quarterly results before the opening bell.
Citigroup shares fell 2% after its earnings report, and revenue fell short of forecasts. Wells Fargo shares rose 2% after it beat estimates.
Goldman Sachs reports its results before the market opens Wednesday, while Bank of America and Morgan Stanley are scheduled to release their reports ahead of the opening bell Thursday.
Shares of Carnival, the company that owns the Costa Cruises luxury ship that ran aground Friday, plummeted 14%. At least 11 people died in the wreck. Carnival said Monday it expects to lose at least $85 million U.S.
Shares of Sears soared 9% amid ongoing chatter that the troubled retailer may go private. Despite the day's spike, Sears' stock remains near its 52-week low, hit earlier this month.
U.S. markets were shuttered Monday for Martin Luther King Day, so Tuesday also marked the first trading day for American markets to react to Standard & Poor's downgrade of nine euro-zone governments, announced Friday evening.
Thanks to the strong global economic data, investors were able to shrug off Standard & Poor's downgrade of nine euro-zone governments and Europe's bailout fund.
But fears about Europe's debt crisis still abound. A Fitch official told Reuters Tuesday, "Greece is insolvent so it will default." Greek officials and private investors are set to resume debt talks on Wednesday.
China's government said the country's economy grew at an annual rate of 8.9% in the last three months of 2011, which wasn't quite as slow as economists had expected.
The upbeat signs boosted copper prices more than 2% Tuesday. Copper prices are closely followed as a key predictor of the economy, since the base metal is used to manufacture goods ranging from cars to plumbing pipes.
Treasury prices for the 10-year note leveled off, pushing yields down to Friday’s 1.85%. Treasury prices and yields move in opposite directions.
Oil for February delivery gained $2.04 to $100.74 U.S. a barrel.
Gold futures for February delivery rose $27.20 to $1,658 U.S. an ounce.
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