RIM weighs down TSX following downgrade; N.Y. advances on strong earns from Ford

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market was little changed Monday, depressed in early trading by heavyweight Research In Motion Ltd. (TSX: RIM.TO) while investors took in good news from the housing sector and a solid quarterly profit from Ford Motor Co.

The S&P/TSX composite index was off 7.8 points to 10,903.

Fresh doubts about the strength of an economic recovery pushed the main index down more than four per cent last week, leading to the first monthly loss since February.

RIM shares fell $2.99 to $60.83 after Citigroup analyst Jim Suvam reduced his rating on the stock to "sell" from "buy" because of the impact of competing smart phones, especially Motorola Inc. phones using Google Inc.'s Android operating system.

In New York, shares in Ford shot up 68 cents to US$7.68 after the firm reported that gains in market share, cost cuts and the U.S. government's Cash for Clunkers program led to a US$997 million profit in the third quarter.

Ford says it now expects to be "solidly profitable" in 2011. Previously the automaker said it would be break-even or better and its shares were up more than six per cent in pre-market trading in New York.

TSX gains were led by the gold sector as the December bullion contract on the New York Mercantile Exchange gained $16.20 to US$1,056.60 an ounce. Barrick Gold Corp. (TSX: ABX.TO) gained 59 cents to $39.55.

The base metals sector advanced 1.23 per cent even as December copper moved two cents lower at US$2.93 a pound. HudBay Minerals (TSX: HBM.TO) advanced 14 cents to $14.15.

The energy sector was slightly higher with the December crude contract in New York up 12 cents to US$77.12 a barrel after falling almost US$3 on Friday.

The Canadian dollar headed up a fifth of a US cent to 92.63 cents US after falling 1.29 cents on Friday on a combination of a higher U.S. dollar and weak commodity prices.

Canada Mortgage and Housing Corp. predicts housing starts will reach 141,900 this year and increase to 164,900 in 2010 as economic conditions improve. It says demand for existing homes has rebounded and both new and existing home markets are characterized by lower inventory levels.

However, the national housing agency says the strong pace of sales in the second and third quarters partly reflects delayed activity and is not likely to be sustained.

The TSX Venture Exchange moved up 5.94 points to 1,297.35.

New York markets were mainly positive as investors appeared to take in stride news that U.S. commercial lender CIT Group Inc. filed for bankruptcy protection on Sunday after a debt-exchange offer to bondholders failed. The filing, one of the biggest in U.S. corporate history, did not come as a surprise, as the lender has been struggling for months to restructure its debt.

New York's Dow Jones industrial average gained 30.6 points to 9,743.3 after losing 2.6 per cent last week.

The Nasdaq composite index moved 1.07 points lower to 2,044.04 while the S&P 500 index added 5.5 points to 1,041.7.

This week, economic reports, including monthly employment data for the U.S. and Canada on Friday, will offer investors a glimpse at the fourth quarter and be pivotal in determining where the market heads during the final months of the year. The Federal Reserve will also weigh in on the economy after the conclusion of a two-day policy meeting on Wednesday.

Among Monday's economic reports, investors will take in the latest reading on the U.S. manufacturing sector. The Institute for Supply Management's index is expected to read 53 in October, compared with 52.6 in September. A reading above 50 indicates growth. If economists are right, it would be the third straight month of growth after 18 months of contraction.

Also due Monday is the National Association of Realtors' index of pending home resales for September. Analysts are expecting the index to remain unchanged from August, which was the best month for the index since March 2007.

And a report on construction spending is expected to show a slight decline in September following a rise in August.

It's also a heavy earnings week in Canada.

Uranium miner Cameco Corp. (TSX: CCO.TO) shares declined 46 cents to $29.70 after it reported that net income rose to $172 million or 44 cents per share in the third quarter, up from $135 million or 39 cents per share in the same period of 2008. Adjusted net income was $104 million or 26 cents per share, down from $127 million or 37 cents per share in the third quarter of 2008. Revenue was $694 million, down from $729 million.

On Friday, Cameco said it has resumed draining its flooded Cigar Lake project and expects to have the mine pumped out sometime next year.

Overseas, worries that the economic recovery is faltering led to a loss of 2.3 per cent on Japan's key Nikkei 225 stock average while Hong Kong's Hang Seng index lost 0.6 per cent.

European bourses were mainly higher following the release of a survey showing that the manufacturing sector in the 16 countries that use the euro expanded in October for the first time in a year and a half.

The monthly purchasing managers index - a broad gauge of business activity - for the euro area rose to 50.7 from September's 49.3. Any reading above 50 indicates that the sector is growing.

A similarly encouraging picture emerged with equivalent British data. The PMI for October spiked to 53.7 from 49.9 in September. October's reading represented the fastest pace of growth since November 2007.

London's FTSE 100 index gained 0.39 per cent, Frankfurt's DAX was off 0.12 per cent while the Paris CAC 40 was up 0.38 per cent.