The Toronto stock market was higher Tuesday amid the latest round of worry that the euro-zone government debt crisis is fast spreading to Italy and Spain.
The S&P/TSX Composite Index ended Tuesday ahead 54.32 points to 13,234.07
The Canadian dollar was up 0.31 cents at 103.53 cents U.S. The currency had been as low as 102.31 cents earlier in the day after increasing nervousness pushed traders to the safe haven status of the U.S. dollar.
Worries about the debt crisis spreading from small economies such as Greece to larger euro-zone economies grew this week as the premiums demanded by investors to lend to Italy and Spain started to soar. The spread between the yield on Italian 10-year bonds and the benchmark German ones hit 3.1% earlier Tuesday, while Spain’s rose to 3.42%
Spreads moderated somewhat and the euro bounced off early lows after Italian Premier Silvio Berlusconi said the government will bring forward the timetable it has for a raft of austerity measures so that the country can have a balanced budget by 2014.
Officials now say they want the measures passed by Sunday instead of sometime in August.
Markets have been depressed by worries about the strength of the global economic rebound and whether Greece will be forced to default on its massive debt.
Traders were also spooked by the fact that euro-zone finance ministers remained vague in their promises of new support measures at a meeting in Brussels. The ministers suggested they would even accept a temporary default by Greece to get a bigger private sector contribution to a second bailout.
The energy sector was flat as Suncor Energy lost 32 cents to $37.98 and Canadian Natural Resources edged down three cents to $39.34.
A stronger greenback usually helps depress oil prices, which are denominated in U.S. dollars, as it makes items such as oil more expensive for holders of other currencies.
The base metals sector rose as metal prices recovered from early losses with the September copper contract ahead two cents at $4.39 U.S. a pound. HudBay Minerals fell 22 cents to $14.52 while First Quantum climbed $3.77 to $134.37.
The August bullion contract in New York rose to a record closing high, taking the gold sector up. Goldcorp Inc. gained $2.01 to $50.84 and Barrick Gold Corp. rose $1.01 to $45.48.
Telecom stocks also helped push the TSX higher while Rogers Communications rose 75 cents to $38.65 and BCE Inc. climbed 34 cents to $38.09.
In other corporate news, shares in Alimentation Couche-Tard gained $1.36 to $29.45 after the convenience store operator boosted its quarterly dividend by 25%. The company’s quarterly profit surged 19% to $64 million. Couche-Tard had $4.84 billion in revenues for the quarter, up nearly 21% from a year-ago.
Quebec gas company Gaz Metro has signed a definitive agreement to purchase Central Vermont Public Service Corp., clearing the way for a $702-million U.S. merger. The deal, if approved by shareholders and regulators, clears the way to merge CVPS with Green Mountain Power, Vermont’s second largest electric utility.
Speaking economically, Statistics Canada reported this morning that this country’s exports increased 1.2% in May while imports rose 1.1%. As a result, according to the nation’s number crunchers, Canada's trade deficit with the world narrowed from $857 million in April to $814 million in May.
ON BAYSTREET
The TSX Venture Exchange gained 6.66 points to 1,951.89, while the Nasdaq Canada index improved 4.91 points to 554.29
In Toronto, 10 of the 14 subgroups were higher on the day. Gold stocks raced ahead 2.8%, while materials surged 1.8%, and consumer staples improved 1.3%
The four laggards were weighed by global base metals and financials, each slipping 0.4%, while industrials were off 0.3%.
ON WALLSTREET
In New York, stocks drifted back in negative territory in the final hour of trade Tuesday after a downgrade of Irish bank debt reminded investors of the problems in Europe.
The Dow Jones Industrials sagged 58.88 points to end the session at 12,446.90, with Boeing and Intel weighing on the blue chip index. Cisco and American Express were the best performers. Earlier, the Dow had climbed as many as 65 points.
Shares of Cisco spiked 2%, amid reports that the company may cut as many as 10,000 jobs -- or 14% of its workforce -- allowing the company to collect $1 billion U.S. in savings in fiscal 2012.
The S&P 500 retreated 5.85 points to 1,313.64, and the Nasdaq Composite Index gave back 20.71 points to 2,781.91.
Stocks drifted back in negative territory in the final hour of trade Tuesday after a downgrade of Irish bank debt reminded investors of the problems in Europe.
Any stimulus from the Fed would be the third quantitative easing, or QE3, since it started buying securities in an effort to stimulate the economy.
But the fact that the Fed is divided on the issue adds uncertainty to the market, so trading will likely remain choppy until investors get more clarity from the Fed.
Plus, fears about the European debt crisis spreading are also keeping investors on edge.
Microchip's stock dragged on both the S&P 500 and the Nasdaq, as the tech firm's shares slumped 14%. The company lowered its earnings guidance, saying supply disruptions resulting from the Japanese earthquake were impacting its automotive business.
Shares of Novellus Systems fell 12% after the maker of chipmaking technology delivered disappointing quarterly results and guidance.
Alcoa reported a larger than expected gain in second-quarter sales but investors weren't impressed.
While Alcoa beat on sales, earnings were only in line with recently lowered analyst estimates. Shares edged lower Tuesday.
News Corp.'s stock fell 0.5% after the media company, plagued by a phone hacking scandal in the United Kingdom, announced a $5-billion U.S. stock buyback program.
On the economic front, the U.S. trade balance figures for May came in at $50.2 billion U.S. -- far larger than a revised $43.6 billion U.S. in April. The trade deficit was also wider than the $44 billion U.S. expected by economists surveyed by Briefing.com.
Investors have been pouring into U.S. Treasuries as uncertainty grows surrounding Europe's debt problems. Treasuries are considered "safer" havens in times of uncertainty since they are backed by the U.S. government.
The price on the benchmark 10-year note increased slightly, pushing the yield down to 2.91% from Monday’s closing of 2.92%. Treasury prices and yields move in opposite directions
Oil for August delivery gained $1.76 to $96.91 U.S. a barrel.
Gold futures for August delivery rose $13.10 to settle at a record high of $1,562.30 U.S. an ounce.
