The Toronto stock market made do with only modest gains Tuesday, upon word of the resignation of Italian Prime Minister Silvio Berlusconi.
The S&P/TSX composite index remained ahead 26.87 points to 12,488.85, after the Berlusconi government won an important budget vote. The result left him without a majority in parliament, leaving investors unclear whether the country can weather a growing debt crisis.
But the mood improved amid word that the prime minister would step down once the austerity budget was passed.
The Canadian dollar recouped 0.39 cents to 99.15 cents U.S.
Political uncertainty in the euro-zone’s third-largest economy rocked financial markets for yet another day and Italy’s borrowing rates spiked to their highest level since the euro was established in 1999.
The yield on Italy’s 10-year bonds jumped as high as 6.74% before settling down to 6.7%. A rate of over 7% is considered unsustainable and proved to be the trigger point that forced Greece, Ireland and Portugal into accepting financial bailouts.
With debts of around €1.9 trillion, Italy is considered by many as being too big for Europe to bail out, like it has already done for Greece, Portugal and Ireland.
The base metals sector gained as the December copper contract lost early gains and was unchanged at $3.54 U.S. a pound. Teck Resources was ahead 97 cents at $40.28 and Ivanhoe Mines gained six cents to $22.58.
The financials sector was ahead with Royal Bank ahead 41 cents to $46.41.
The TSX energy sector was little changed as Suncor Energy was flat at $33.26 and Imperial Oil was up 54 cents at $42.90.
The industrials sector was ahead while Bombardier Inc. advanced seven cents to $4.32.
The gold sector dropped as bullion edged up. Goldcorp Inc. faded 88 cents to $53.42.
In earnings news, Uranium One Inc. had a profit of $45.8 million in the third quarter, a big improvement from a year ago loss of $44.8 million, as it more than doubled revenue compared with the same time last year. Its shares gained two cents to $2.81.
TMX Group’s net income increased 21% in the third quarter to $67 million, helped by stronger derivatives trading, clearing and both listing and information services. Revenue in the quarter was $167.8 million, up 15% from the third quarter of 2010 and its shares gained 30 cents to $44.65.
Shares in Finning International Inc. were off 58 cents to $23.22 as the heavy equipment dealer reported earnings of $35 million or 21 cents a share in its latest quarter. That is down from $63 million a year ago as the company was hit by costs related to a new parts system. Finning missed analyst estimates of 26 cents a share.
On the economic front, Canadian Mortgage and Housing Corporation reported Tuesday that housing starts remained essentially steady in October, falling 0.6% to 207,600 annualized units from September’s 208,800. Market expectations were for a bigger drop, of 6.1% to 195,000.
ON BAYSTREET
The TSX Venture Exchange prospered 7.75 points to 1,669.67, while the Nasdaq Canada index regained 1.21 points to 429.67
Of the 14 Toronto subgroups, 10 were in positive country, led by health-care stocks, up 1.7%, metals and mining, up 1.3%, and global base metals, ahead 0.8%.
The four laggards were weighed by gold, down 1.5%, materials, off 0.7%, and information
technology, off 0.4%.
ON WALLSTREET
In New York, stocks gained ground Tuesday afternoon, swinging back into positive territory amid a choppy session, after Italian Prime Minister Silvio Berlusconi agreed to resign.
The Dow Jones Industrials raced ahead 101.79 points by the closing bell to 12,170.20
The S&P 500 gained back 14.80 points to 1,275.92, while the Nasdaq Composite Index grew 32.24 points to 2,727.49.
Stocks had been seesawing Tuesday as the fate of Berlusconi hung in the balance, but moved firmly higher in afternoon trading after the Italian president's office confirmed that Berlusconi will step down. He is expected to resign following the approval of a new budget law that is currently making its way through parliament.
Still, Berlusconi's pending departure only allows investors to scratch off one of Europe's long list of worrisome questions.
Hopes are high for Italy to quickly put a new government in place with the ability to implement major structural reforms, but they will not be enough to solve Italy's budget problems, said one expert.
Shares of McCormick and Schmick's jumped after restaurant operator Landry's agreed to buy the seafood chain for $8.75 U.S. per share.
Fossil posted third-quarter earnings results that topped Wall Street's expectations, but lowered its guidance for the current quarter, due to a strengthening dollar. Shares of the fashion accessories maker dropped.
Shares of Rackspace advanced after the web hosting company posted a healthy profit on better-than-expected sales late Monday. Shares of Priceline also gained on an earnings beat.
The price on the benchmark 10-year U.S. Treasury fell, raising the yield to 2.06% from 1.99% late Monday. Treasury prices and yields move in opposite directions.
Oil for October delivery gained $1.44 to $96.96 U.S. a barrel
Gold futures for December delivery gained $8.10 to settle at $1,799.20 U.S. an ounce.
