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Latest Headlines
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Mar 16, 2010 9:50:00 AM MST
Strong commodities gain boosts TSX; N.Y. rises ahead of Fed rate announcement (Dollar-Markets)
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TORONTO _ Rising oil and metal prices gave the Toronto stock market a solid advance Tuesday while investors hope a mid-afternoon announcement from the U.S. Federal Reserve will give reassurance that interest rates will stay at historic lows.
The S&P/TSX composite index gained 68.3 points to 12,077.1.
Investors widely expect the Fed to hold its key interest rate near zero because the economy, in the early stages of a recovery, would suffer under the strain of a rate hike. But investors will be looking to the Fed´s statement to see if there are any clues about when rates might change.
The Fed has repeatedly said inflation is not a near-term problem, and that it plans to keep rates low for an "extended period."
Economists generally think "extended period" means at least six more months.
There has been talk that the Fed could change the wording but many analysts say it is far too early to make the change.
"We are not in that camp we think that they will continue holding on to (that) language for some time to come," said Meny Grauman, senior economist at CIBC World Markets.
"We think that the Fed will only start to raise rates early in 2011 so that gives us a few more meetings where we expect that language to remain on hold."
The tone of the statement could also affect the Canadian dollar since the prospect of a widening spread between Canadian and American rates has helped lift the loonie towards parity with the greenback in recent months. The Bank of Canada is expected to raise rates by up to three-quarters to a full point later this year, while the Fed moves more slowly because the American economy is weaker than Canada´s.
Oil advanced amid indications from Saudi Arabia that this week´s OPEC meeting will decide to leave output unchanged.
The TSX energy sector was up 0.43 per cent as the April crude contract on the New York Mercantile Exchange ran up $1.82 to US$81.62 a barrel. Suncor Energy (TSX:SU) rose 21 cents to C$31.25.
Encana Corp. (TSX:ECA) shares slipped 26 cents to $33.69 as it said its natural gas inventories are enough for the company to more than double production over the next five years.
A falling U.S. dollar helped push the April bullion contract on the Nymex ahead $18.70 to US$1,124.10 an ounce, taking the TSX global gold sector up 2.28 per cent. Barrick Gold Corp. (TSX:ABX) climbed 93 cents to C$40.80.
Alamos Gold Inc. (TSX:AGI) shares gained 66 cents to $14.42 after reporting fourth-quarter earnings climbed to a record $20.1 million as it drove production higher but kept costs down. Revenues were up 62 per cent to $52.6 million.
Kinross Gold Corp. (TSX:K) shares rose 43 cents to $18.40 after the miner reached a definitive agreement to buy the rest of Underworld Resources Inc. (TSXV:UW) in a previously announced stock-and-cash deal that values the junior mining company at $139.2 million.
The May copper contract in New York added seven cents to US$3.38 a pound and the base metals sector improved by 1.24 per cent. HudBay Minerals (TSX:HBM) gained 26 cents to C$13.62.
First Quantum Minerals Ltd. (TSX:FM) rose $2.21 to C$90.39 as the company reported a fourth-quarter profit of US$227.2 million, reversing a year-ago loss of $491.6 million, as the gold and copper miner was helped by improved prices.
Telecom and tech stocks held the TSX back as BCE Inc. (TSX:BCE) fell 26 cents to $30.83, while Research In Motion Ltd. (TSX:RIM) ped 73 cents to $76.44.
Meanwhile, the Canadian dollar advanced in the wake of positive news from the manufacturing sector.
The loonie rose 0.48 of a US cent to 98.55 cents US as Statistics Canada reported that shipments rose 2.4 per cent in January from the month before to $44.6 billion. It was the fifth consecutive rise.
There was also relief from an agreement by the European union to help Greece with loans if the debt-burdened country needs it.
The exact form of the help for Greece _ likely some form of bilateral loan _ was yet to be decided. Jean-Claude Juncker, head of the eurozone group, said European Union leaders meeting later this month would make the final decision on the size and the type of financial rescue.
Greece needs to borrow euro54 billion (US$74 billion) this year _ euro20 billion of that in April and May _ but is being forced to pay higher interest rates than more fiscally prudent European countries.
The TSX Venture Exchange was 8.7 points higher at 1,570.21.
New York markets were higher ahead of the Fed announcement while taking in data showing lower housing starts.
The Dow Jones industrial average was up 33 points to 10,675.1. The Nasdaq composite index added 10.74 points to 2,372.95 while the S&P 500 index edged up 5.9 points to 1,156.4.
The U.S. Commerce Department said construction of new homes fell 5.9 per cent to a seasonally adjusted annual rate of 575,000 units as activity was hampered by last month´s severe storms. That was slightly better than the rate of 570,000 units economists polled by Thomson Reuters had predicted.
At the same time, January activity was revised higher to a pace of 622,000 units, which was the best showing in 14 months.
In other corporate news, WestJet Airlines Ltd. (TSX:WJA) shares declined 42 cents to $13.45 after Sean Durfy resigned as president and CEO of the carrier effective April 1 for "personal reasons." WestJet did not say whether Durfy was pushed out or left voluntarily, but the company has been hit by weak earnings and a problem-filled launch of a new reservation system that has eaten into profits
Overseas, Tokyo´s Nikkei 225 stock average fell 0.3 per cent while Hong Kong´s Hang Seng lost 0.3 per cent.
London´s FTSE100 index rose 0.68 per cent, Frankfurt´s DAX gained 1.30 per cent and the Paris CAC 40 was up 1.44 per cent.
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