The Toronto stock market gained ground by Monday’s close, led by strength in the consumer staples sector after grocery giant Loblaw Cos. Ltd. announced plans to buy Shoppers Drug Mart Corp. for $12.4 billion in cash and stock.
The S&P/TSX Composite Index gained 66.18 points – off its highs of the day -- to finish at 12,528.35
The Canadian dollar faded 0.32 cents to 95.97 cents U.S.
Loblaw is offering $33.18 in cash plus about six-10ths of a Loblaw common share for each Shoppers common share. Loblaw concluded business up $2.58, or 5.4%, to $50.13, while Shoppers shares climbed $11.72, or 24.2%, to $60.12.
In a related move, Loblaw's majority owner, George Weston Ltd. will subscribe for 10.5 million additional shares of the grocer for $47.55, the closing price for Loblaw shares on Friday. Proceeds from the deal will be used to pay a portion of the Shoppers purchase. George Weston climbed $3.72, or 4.5%, to $87.
The TSX consumer staples group jumped and also had support from Jean Coutu Group, which was ahead 89 cents to $18.98. There had been speculation earlier this year that grocer Metro Inc. might make a move to buy the drugstore chain.
The financials group was ahead while Manulife Financial improved by six cents to $18.02 and Royal Bank gained 46 cents to $62.26.
The industrials component was ahead as Canadian Pacific Railway advanced 30 cents to $132.03.
The utilities group was up, as Algonquin Power and Utilities rose 14 cents to $7.39.
Resource stocks lagged while oil erased early losses. Oil is up about 10% so far this month, jolted higher by unexpectedly sharp drops in U.S. crude and gasoline inventories, which suggest stronger demand.
The energy sector was up and Talisman Energy advanced nine cents to $11.99.
The TSX gold sector was off while August bullion gained strength (see below).
The signs of slowing Chinese growth depressed other commodity prices. The September copper contract on the New York Mercantile Exchange was down one cent to $3.14 U.S. a pound. The base metals sector was off.
First Quantum Minerals declined 32 cents to $15.46.
Endeavour Silver Corp. were up 40 cents, or 11.9%, to $3.77 after the miner said it is adjusting its second quarter revenue upward, saying the figure reported on July 10 was 12% lower than it should have been. The revised revenues for Q2 are $71.3 million, up 76%, from $40.5 million in the same quarter last year.
The company attributes the change to the marking to market of certain concentrate sales that had already received final pricing during the quarter.
In other corporate news, New Flyer Industries Inc. says it received new orders for the equivalent of 513 buses, including 253 firm orders and 260 options, during the second quarter -- a big increase from the comparable period last year.
The Winnipeg-based company, which makes transit buses at factories in Canada and the United States, received firm and option orders for only 90 equivalent units in the second quarter of 2012. Its shares were off four cents to $11.13.
The TSX ended last week with a gain of 327 points or 2.7%, leaving it in positive territory year to date, albeit by only about 30 points as traders bought up resource stocks that have beaten down.
ON BAYSTREET
The TSX Venture Exchange subtracted 1.69 points to 896.73
All but three of the 14 Toronto subgroups were higher on the day, led by consumer staples, ballooning 7%, utilities, better by 1.4%, and materials, gaining 0.5%.
The three laggards were information technology, down 0.5%, metals and mining, off 0.2%, and energy, sliding 0.03%.
ON WALLSTREET
U.S. stocks managed modest gains Monday on earnings from Citigroup, but the rise was tempered by a weak report on retail sales.
The Dow Jones Industrials gained 19.96 points to 15,484.30… yet another all-time record.
The S&P 500 index inched higher 2.31 points to 1,682.50. The NASDAQ Composite was stronger by 7.41 points to 3,607.49
Investors welcomed better-than-expected quarterly results from Citigroup, which reported net income of $4.2 billion U.S., or $1.34 U.S. per share, driven by a jump in revenue and lower loan losses.
Shares of Leap Wireless International jumped 112% after AT&T said on Friday that it plans to acquire the prepaid wireless provider for about $1.2 billion U.S.
Shares of jeweler Tiffany & Co. were up 3.4% after analysts at Stifel upgraded the stock.
Boeing's stock edged up after British investigators said that a Dreamliner fire at London Heathrow Airport last Friday was not linked to its batteries, which have created problems in the past.
Federal Reserve chairman Ben Bernanke will be on Capitol Hill this week for his annual testimony on the economy. Bernanke gave the market a boost last week after he said U.S. monetary policy will remain "highly accommodative" for the foreseeable future.
The Chinese government said gross domestic product rose by 7.5% in the second quarter, matching official estimates. While growth was slower than the 7.7% rate in the first quarter, investors were relieved that Chinese GDP was not weaker than expected.
In domestic economic news, U.S. retail sales rose 0.4% in June, the Census Bureau said Monday. That's a slowdown from a 0.6% rise a month earlier, and weaker than expected.
Separately, the New York Federal Reserve bank said its index of manufacturing activity in the region rose to 9.5 in July, from 7.8 in June.
Prices for the 10-year U.S. Treasury hiked, dropping yields to 2.56% from Friday’s 2.60%. Treasury prices and yields move in opposite directions.
Oil prices tacked on 60 cents to $106.55 U.S. a barrel.
Gold prices increased $6.60 to $1,284.20 U.S. an ounce.
