TSX higher on economic data, Ford earns; RIM weighs down market after downgrade

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market moved into positive territory mid-morning Monday as American economic data and a solid quarterly profit from Ford Motor Co. helped balance a downturn in tech heavyweight Research In Motion Ltd. (TSX: RIM.TO).

The S&P/TSX composite index was up 44.3 points to 10,955.1.

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.

The investor sentiment improved after the latest reading on the U.S. manufacturing sector came in much better than expected. The Institute for Supply Management's index came in at 55.7 during October, against the 53 reading that was forecast. The reading represented the strongest growth in the ISM since April 2006.

And the volume of signed contracts to buy previously occupied homes surged 6.1 per cent in September from August to 110.1. That was much higher than the 103.8 reading that economists had expected, as buyers scrambled to take advantage of a tax credit for first-time owners that expires at the end of this month.

Meanwhile, RIM shares fell $3.15 to $60.67 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 54 cents to US$7.54 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, up 2.26 per cent as the December bullion contract on the New York Mercantile Exchange gained $21.20 to US$1,061.60 an ounce. Barrick Gold Corp. (TSX: ABX.TO) gained 76 cents to $39.72.

The base metals sector advanced 0.9 per cent even as December copper moved a cent higher at US$2.97 a pound. HudBay Minerals (TSX: HBM.TO) advanced 13 cents to $14.14.

The energy sector was ahead 0.44 per cent with the December crude contract in New York up 90 cents to US$77.90 a barrel after falling almost US$3 on Friday.

The Canadian dollar headed up 0.65 of a US cent to 93.08 cents US.

The TSX Venture Exchange moved up 6.64 points to 1,298.05.

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 surged 129.5 points to 9,842.2 after losing 2.6 per cent last week.

The Nasdaq composite index moved 15.95 points higher to 2,061.06 while the S&P 500 index added 13.75 points to 1,049.95.

Other key economic data this week 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.

Canadian and U.S. employment data for October is released Friday while the Federal Reserve will weigh in on the economy after the conclusion of a two-day policy meeting on Wednesday.

It's also a heavy earnings week in Canada.

Uranium miner Cameco Corp. (TSX: CCO.TO) shares declined eight cents to $30.08 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 1.26 per cent, Frankfurt's DAX was up 0.95 per cent while the Paris CAC 40 was up 1.25 per cent.