Energy and financial companies take TSX higher; higher oil also benefits N.Y.

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market held onto a solid advance Monday afternoon with leadership provided by the energy and financial sectors.

The S&P/TSX composite index was down from an early gain of just over 100 points but at mid-afternoon was still ahead 79.6 points to 10,469.4 ahead of a shortened trading week in Canada and the United States.

The TSX energy sector was ahead 1.4 per cent as the August crude contract on the New York Mercantile Exchange moved up $2.46 to US$71.62 even as the International Energy Agency said it is cutting at least three million barrels a day from its oil demand forecasts for the coming five years.

It cited the impact of the recession, combined with signs of a structural shift to less intensive long-term oil use.

EnCana Corp. (TSX: ECA.TO) gained 96 cents to $57.77, while Suncor Inc. (TSX: SU.TO) was up 87 cents to $35.75.

The financial sector was up 1.7 per cent. Scotiabank (TSX: BNS.TO) was ahead $1.06 to $44.06 and Royal Bank (TSX: RY.TO) improved $1.22 to $48.76.

The Canadian dollar moved down 0.18 of a cent to 86.46 cents US.

The TSX Venture Exchange declined 8.51 points to 1,103.05.

The TSX is building on a gain of just under one per cent last week. The market's main index closed Friday about 300 points shy of the 2009 high of 10,714 set on June 11.

But analysts think that the market could get a second wind fairly soon.

"I would think that once we see the second-quarter numbers, it will be 'are those green shoots actually emerging' - and probably they will be because we're going to have an inventory rebuild," said Gavin Graham, director of investments at BMO Asset Management.

"Now (investors) know the world isn't coming to an end, you need to rebuild them at least to a level that enables you to fulfil customer demand. And so that's going to give us a really good kicker in the second and third quarter."

However, after that he sees a lacklustre showing on markets as global economies work their way out of a serious recession.

"You've seen the forecasts from the people at the Organization for Economic Co-operation and Development and the World Bank saying we're going to be growing next year and maybe it's going to be one per cent and that's quite frankly a pretty unimpressive rate of growth," added Graham.

Rising energy stocks also helped drive New York markets higher after both the Dow industrials and the S&P 500 lost ground last week.

The Dow Jones industrial average moved ahead 67.4 points to 8,505.8 following a 1.2 per cent drop last week with ExxonMobil (NYSE: XOM) ahead $1.06 to US$70.11.

The Nasdaq composite index climbed 5.19 points to 1,843.41 while the S&P 500 edged up 6.05 points to 924.95.

There was little by way of economic or corporate news scheduled for Monday.

However the trading week - shortened by Canada Day on Wednesday and by the U.S. Independence Day holiday on Friday - will see key data that will give investors a better sense of where the economy is headed.

Statistics Canada will release April gross domestic product figures on Tuesday. Economists expect to see a contraction of 0.1 per cent on the month, following a 0.3 per cent dip in March.

And on Thursday, the U.S. government releases its June employment report. Investors are braced for the American economy to shed 365,000 jobs during the month.

Outside of the energy and financial groups, performance was lacklustre with declines led by a one per cent dip in the base metals sector, even as copper prices rose two cents to US$2.31 a pound

Teck Cominco Ltd. (TSX: TCK-B.TO) stepped back 55 cents to $18.58 and Sherritt International (TSX: S.TO) declined seven cents to $5.27.

The August bullion contract on the Nymex slipped 30 cents to US$940.70 an ounce and the gold sector was ahead a slight 0.25 per cent.

The market also got support from heavyweight Potash Corp. (TSX: POT.TO) up $2.84 to $110.50 despite its announcement at the end of last week that it was cutting its earnings guidance. It cited lower-than-expected sales volumes as customers delay purchases and lower realized prices for phosphate fertilizers.

The chief executive of Agrium Inc. (TSX: AGU.TO) says CF Industries Holdings Inc. is still resisting takeover efforts from the Calgary-based fertilizer giant. Mike Wilson says CF's chairman indicated he was not willing to meet to discuss the nearly US$4-billion deal.

He says CF is disregarding the wishes of its shareholders, 62 per cent of whom had tendered their stock to Agrium's offer as of last week and Agrium is still pursuing its hostile bid for the American fertilizer company, which expires on July 22. Agrium shares were ahead 75 cents to $47.55.

Coffee giant Tim Hortons Inc. (TSX: THI.TO) is returning its home base to Canada with a plan to reorganize and convert to a Canadian-based corporation.

The popular coffee house chain is currently owned by an American parent company after its spinoff from U.S.-based burger giant Wendy's in 2007.

Tim Hortons says the reorganization will save money due to Canada's lower tax rates and make international expansion easier. Its shares slipped six cents to $28.60.