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Latest Headlines
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Mar 16, 2010 12:44:00 PM MST
Stock markets maintain advance as U.S. Fed leaves interest rates unchanged (Dollar-Markets)
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TORONTO _ North American stock markets moved ahead Tuesday afternoon following reassurance from the U.S. Federal Reserve that interest rates will stay at historic lows for a while yet.
The S&P/TSX composite index gained 64.6 points to 12,073.4 supported by rising commodity and financial stocks.
The Dow Jones industrial average rose 31.2 points to 10,673.4.
Investors expected 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.
The Fed said again that it plans to keep rates low for an "extended period," which economists generally think means at least six more months.
There had been talk that the Fed could change the wording but many analysts said it was far too early to do that.
"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 Canadian dollar moved ahead 0.53 cents US to 98.6 cents US, its highest level since July, 2008, following the Fed announcement.
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 0.24 per cent as the April crude contract on the New York Mercantile Exchange ran up $1.78 to US$81.58 a barrel. Suncor Energy (TSX:SU) rose 21 cents to C$31.25.
Encana Corp. (TSX:ECA) shares slipped 39 cents to $33.56 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 $17.10 to US$1,122.50 an ounce, taking the TSX global gold sector up 1.67 per cent. Barrick Gold Corp. (TSX:ABX) climbed 65 cents to C$40.52.
The May copper contract in New York added five cents to US$3.36 a pound and the base metals sector improved by 1.11 per cent. HudBay Minerals (TSX:HBM) gained 31 cents to C$13.67.
First Quantum Minerals Ltd. (TSX:FM) rose $2.07 to C$90.25 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.
The financials sector was ahead 0.72 per cent with TD Bank (TSX:TD) ahead $1.34 to $74.70.
Tech stocks held the TSX back as Research In Motion Ltd. (TSX:RIM) ped $1.06 to $76.11.
Positive news from the manufacturing sector helped push the Canadian dollar higher.
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.
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.
Meanwhile, Standard & Poor´s said Tuesday it was taking Greece off so-called credit watch. That means the agency is not thinking about downgrading the country´s credit rating for now.
The TSX Venture Exchange was 8.54 points higher at 1,570.05.
Other New York markets advanced following the Fed announcement amid data out earlier in the session that showed lower housing starts.
The Nasdaq composite index climbed 14.03 points to 2,376.24 while the S&P 500 index edged seven points higher to 1,157.5.
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 44 cents to $13.43 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.
Western Coal Corp. (TSX: WTN) shares moved up 26 cents to $4.79 after the company projected sales of six million tonnes in fiscal 2011, which would be 75 per cent more than fiscal 2010.
Alamos Gold Inc. (TSX:AGI) shares gained 56 cents to $14.32 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 37 cents to $18.34 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.
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