The Toronto stock market was lower Thursday as early euphoria about containing Europe’s debt crisis faded amid disappointing economic news from China.
The S&P TSX Composite approached noon down 57.36 points to 12,146.75
The Canadian dollar edged up 0.09 cents to 98.31 U.S. cents
The financials sector led TSX decliners despite earnings from TD Bank and CIBC that beat analyst expectations.
TD shares lost $1.26 to $72.24 as it said fourth-quarter earnings rose 58% to $1.57 billion.
Excluding one-time items, the bank earned $1.77 a share, much higher than the $1.53 a share that analysts expected.
CIBC’s quarterly profit jumped 59% to $794 million due mainly to wholesale banking income, the company said. Excluding one-time items, the bank earned $1.87 a share, six cents better than analysts expected. Its shares moved 81 cents lower to $72.10.
China’s central bank announced that the amount of money China’s commercial lenders must hold in reserve will be cut. Lending has been tightened as Beijing dealt with unacceptably high levels for inflation, especially for food but price pressures have moderated recently.
The move to encourage lending in China was especially welcome after business surveys released Thursday showed manufacturing contracted in November for the first time in nearly three years.
China has been a rare bright spot for the global economy since the financial crisis of 2008. Its strong growth has been particularly helpful for the resource-heavy TSX as strong demand has boosted demand for commodities such as oil and metals.
Meanwhile, commodity prices were mixed. The TSX energy sector lost ground as Cenovus Energy gave back 47 cents to $33.64.
The gold sector was down as Barrick Gold Corp. faded 57 cents to $53.48.
The March copper contract was off three cents at $3.55 U.S. after the lending news from China sent prices for the metal surging 5.5% Wednesday. The base metals sector was down while First Quantum Minerals shed 75 cents to $19.85.
The consumer staples sector led advances on the TSX with Loblaw Cos. ahead 94 cents to $37.94.
Shares in apparel manufacturer Gildan Activewear Inc. plunged $7.03 or 28.67 per cent to $17.49 as profits fell to $48.5 million U.S. from $56.8 million U.S. a year ago. The company also predicted a first-quarter loss on Thursday, saying its performance would be hurt by finishing up inventories that used higher priced cotton, the destocking of distributor inventory and some discounts.
And Lululemon Athletica Inc. continues to cash in on the success of its yoga-inspired fashions and accessories. The Vancouver-based retailer saw its third-quarter profit soar by 51 per cent to $38.8 million U.S. or 27 cents U.S. per share, beating estimates by two cents. However, it shares fell $5.49 or 10.8% to $45.26 as revenue jumped 31% to $230.2 million U.S., missing expectations by nearly $6 million U.S
Bombardier Inc. posted net income of $192 million in the third quarter, up from $147 million in the same period last year. The Montreal-based transportation giant says revenue was up 16% from its previous third quarter to $4.6 billion. Its shares were up four cents to $3.82.
Elsewhere, power producer TransAlta Corp. said Wednesday it expects its profits to take a hit of up to $25 million from an extended outage at its jointly owned Genesee 3 power plant near Edmonton. Its shares gained 20 cents to $22.19.
ON BAYSTREET
The TSX Venture Exchange slipped 1.60 points to 1,546.85, while the Nasdaq Canada index gained 4.27 points to 409.23
All but three of the 14 Toronto subgroups were negative by midday. Consumer discretionaries were off 1.6%, metals and mining were down 1.3%, and global base metals shed 1.2% of their strength.
The three gainers were consumer staples, up 1.6%, information technology, ahead 1.2%, and telecoms, inching up 0.1%.
ON WALLSTREET
In New York, stocks slumped Thursday, after a big rally on Wednesday, as investors were reluctant to push prices higher amid ongoing worries about Europe.
The Dow Jones Industrials fell 39.58 points by noon ET to 12,006.10.
The S&P 500 erased 3.47 points, to 1,243.49, while the Nasdaq Composite forged ahead 3.57 points to 2,623.91
Shares of Yahoo jumped more than 3% amid speculation that Chinese Internet giant Alibaba and several private equity firms are planning to bid for all of Yahoo, according to news reports citing people familiar with the situation.
That news followed reports Wednesday that Microsoft and private equity firm Silver Lake were considering making an offer for a minority stake in Yahoo.
Shares of Lululemon sank 11% after the athletic appeal maker reported quarterly profits and sales figures that rose from last year, but missed analysts' expectations.
Barnes and Nobel shares plunged 21% after the bookseller reported a $6.6-million U.S. net loss for the second quarter as total sales declined.
On Wednesday, all three major stock indexes closed the session more than 4% higher. The Dow's 490-point gain is the largest of 2011, and the best percentage gain since March, 2009.
Investors around the world raced to scoop up stocks, after the Federal Reserve said it will work with other central banks to support the global economy. The central banks' coordinated move gave investors hope that world leaders are taking the necessary steps, to avoid a credit crunch stemming from Europe's sovereign debt crisis.
Economically speaking, the Institute for Supply Management (ISM) manufacturing Index, a survey of purchasing managers, rose 1.9 to 52.7 in November. Analysts were expecting the index to hit 51.0 for November, according to consensus estimates from Briefing.com.
Construction spending in October rose 0.8% to $798.5 billion U.S., compared with a forecasted 0.3% increase.
The number of people filing for initial unemployment benefits rose by 6,000 to 402,000 in the latest week, the government said. That was higher than expected, with economists forecasting jobless claims to have totaled 390,000 for the week ending Nov. 26.
Setting the stage for Friday's closely-watched government jobs data, a report from Automatic Data Processing showed Wednesday that private-sector employment grew by 206,000 jobs in November.
A survey of economists predicts that the monthly jobs report due Friday will show that the economy added 110,000 jobs in November. In October, 80,000 jobs were added to payrolls. Most of the gain will likely come from the private sector, where it's estimated another 135,000 jobs were added.
The price on the benchmark 10-year U.S. Treasury dropped, pushing the yield up to 2.09% from 2.07% Wednesday. Treasury prices and yields move in opposite directions
Oil for January delivery sank $1.12 to $99.24 U.S. a barrel.
Gold futures for December delivery gained 90 cents to $1,749.40 U.S. an ounce.
