Blue chips in Toronto recovered from a steep loss Friday -- as traders welcomed the US Treasury Department's indication it might step in and bail out the troubled automakers after a $14 billion bill collapsed in the Senate.
The S&P/TSX composite index was up 123.55 points to 8,515.45.
Despite the defeat of the automotive bailout package in the U.S. Senate, the Canadian government will continue to hold talks on possible aid to the Canadian subsidiaries of General Motors, Ford and Chrysler, federal Finance Minister Jim Flaherty said today.
The Detroit Three automakers are seeking a total of $6.8 billion in loans and credit lines from Ottawa and Ontario, saying they need some of that money before the end of the year as they struggle with a worsening economy.
In corporate news -- BCE Inc. plans to buy back up to 5 percent of its common shares following the collapse of its bid to take the company private. The company has also reinstated its common share dividend program.
On the data front -- the Labor Department said the Producer Price Index, its monthly measurement of the price of goods at the wholesale level, fell 2.2 percent in November. The PPI was expected to decline 2 percent for November, according to a consensus of economist projections compiled by Briefing.com, following a decline of 2.8 percent the prior month.
The core PPI, which does not include volatile fuel and food prices, edged up 0.1 percent, as expected, following an increase of 0.4 percent in October.
Also -- the Commerce Department released its retail sales figures for November, showing a narrower-than-expected decline of 1.8 percent. A consensus of economist projections from Briefing.com had expected sales to fall 2 percent in November, compared to a record decline of 2.8 percent the prior month.
In Canada -- sales of new motor vehicles were down 0.9 percent in October to 140,158 units, according to data released Friday morning by Statistics Canada.
Canadian industries reduced their use of production capacity for a fifth straight quarter in the third quarter, according to data released Friday morning by Statistics Canada. Industries operated at 77.4 percent of their capacity, down from 77.7 percent in the second quarter. This was the rate's lowest level since data were first kept in 1987.
The Canadian dollar, meanwhile, was trading down 0.86 of a cent to 80.02 cents US.
BAYSTREET
Nine of the TSX sub-groups traded higher today -- gold stocks were up 4.91 percent followed by a 3.37 percent rise in financial issues and a 2.21 percent rise in mining stocks.
COMEX gold for February delivery fell $6.10 to $820.50 US an ounce.
On the downside -- telecom stocks fell 1.96 percent; health-care issues shed 0.95 percent and industrial stocks dipped 0.66 percent.
Meanwhile, the TSX Venture Exchange rose 5.30 points to 718.74 and the NASDAQ Canada was up 1.68 points at 402.92.
ON WALLSTREET
U.S. stocks skidded Friday but staged a recovery from earlier lows to close higher after the Treasury Department said it would step in to prevent a failure of the U.S. auto industry amid intensifying worries that more layoffs would deepen the recession.
The Dow Jones Industrial Average, down as much as 217 points early on, ended up 64.59 points, or 0.8 percent, at 8629.68, and the S&P 500 edged up 6.15 points, or 0.7 percent, at 879.74. The Nasdaq led the way, with a gain of 32.84 points, or 2.2 percent, at 1540.72.
Negotiations to bring a bailout bill up for vote in the Senate fell apart late Thursday as Democrats and Republicans were unable to reach a deal. The Senate voted 52-35 to bring the measure for a vote, but that was short of the 60 votes needed to advance the legislation.
In response to the bill's failure, the White House said it might now be willing to use money drawn from the $700 billion Wall Street bailout, known as the Troubled Asset Relief Program (TARP). The Treasury also said it's prepared to pitch in.
In corporate news -- Bank of America Corp. late Thursday said it would cut as many as 35,000 jobs during the next three years as it adjusts to the recession and completes its pending acquisition of Merrill Lynch & Co.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.58 percent from 2.60 percent Thursday. Treasury prices and yields move in opposite directions. The 10-year yield dipped below 3 percent in November for the first time since the note was first issued in 1962.
Rejection of the bailout caused oil prices to tumble. U.S. light crude oil for January delivery fell $1.70 to settle at $46.28 US a barrel on the New York Mercantile Exchange.
