TSX rises as gold crosses US$1,100 an ounce amid disappointing employment data in Canada, U.S.

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - Rising gold stocks helped push the Toronto stock market higher Friday morning amid employment news from Canada and the United States that missed expectations.

The S&P/TSX composite index gained 72 points to 11,252.7 after optimism about an improving economy sent the TSX up 109.5 points on Thursday.

But investors got a big splash of cold water as Statistics Canada said more than 43,000 jobs were lost last month, a huge miss from economists' consensus which forecast the addition of 10,000 jobs. And the unemployment rate jumped two-tenths of a point to 8.6 per cent, against expectations that it would stay unchanged.

"The positive was that there was a net gain in full-time jobs, with part-time work dropping 60,000," said CIBC World Markets chief economist Avery Shenfeld.

"On the negative side was that heavy job shedding at both private and public sector employers were offset by a gain of 28,000 self-employed positions, often an indication of lower-paying work."

The Canadian dollar was down sharply in the wake of the Canadian report, falling 0.54 of a cent to 93.29 cents US.

In the U.S., the Labour Department reported that 190,000 jobs were lost last month, against estimates of about 175,000, while the jobless rate came in at 10.2 per cent, up sharply from 9.8 per cent.

TSX losses were softened by a three per cent gain in the gold sector as the previous metal hit a record $1,100 an ounce. The December bullion contract on the Nymex ran ahead $11.50 to US$1,100.80 an ounce. Goldcorp Inc. (TSX: G.TO) gained $1.17 to C$44.35.

The base metals sector was up 0.8 per cent as December copper moved down 1.55 cents at US$2.94 a pound. HudBay Minerals (TSX: HBM.TO) moved down 28 cents to C$16.31.

The TSX energy sector rose 0.37 per cent as oil prices retreated on the latest indication of a weak U.S. economy. The December crude contract on the New York Mercantile Exchange fell $1.77 to US$77.89 a barrel. Canadian Oil Sands Trust (TSX: COS-UN.TO) units lost 63 cents to C$30.11.

The financial sector led declining segments, down 1.15 per cent with Scotiabank (TSX: BNS.TO) off 81 cents to $46.34.

The telecom sector was down almost one per cent after Telus Corp. (TSX: T.TO) reported that net income fell to $280 million or 88 cents per share in the third quarter, down from $286 million or 89 cents per share a year earlier. Operating revenue slipped by 1.6 per cent to $2.41 billion from $2.45 billion. Telus shares moved 59 cents lower to $33.39 as it also said it now expects 2009 revenue to be from $9.6 billion to $9.7 billion, which is lower than a range of between $9.7 billion to $9.9 billion issued in May.

The TSX Venture Exchange moved up 6.49 points to 1,38.04.

New York markets were mainly weak amid the disappointing employment data with the Dow Jones industrials down 6.1 points to 9,999.9 after running up 204 points Thursday.

The Nasdaq composite index rose 1.25 points to 2,106.57 after advancing 50 points and the S&P 500 index inched up 0.85 of a point to 1,067.5 to after gaining 20 points.

The market has been expecting U.S. unemployment to top 10 per cent before peaking. But the pace of job losses has accelerated and is likely to go higher.

The report bodes poorly for American consumer spending, a major component of economic activity. Consumers will keep a tight lid on their spending if they are worried about losing their jobs. And robust consumer spending is necessary to sustain the economic recovery.

Toronto investors took in earnings reports from a variety of major Canadian corporations.

Suncor Energy Inc. (TSX: SU.TO) is reporting third-quarter net earnings of $929 million, or 74 cents per common share, in its first quarterly earnings report since merging with Petro-Canada. That compares to net earnings of $815 million, or 87 cents per common share, in the year-ago period. But Suncor's operating earnings plunged in the quarter to $288 million, compared to $810 million a year ago and its shares dipped 10 cents to $35.28.

Air Canada (TSX: AC-B.TO) reported a quarterly profit of 4277 million or $2.44 a share in the third quarter, thanks to lower fuel prices and foreign exchange gains. That was an improvement from a year-ago net loss of $132 million or $1.32 per share. Air Canada's operating revenues totalled $2.7 billion for the quarter, down from $3.1 billion last year and its shares rose six cents to $1.20.

Brookfield Asset Management Inc. (TSX: BAM-A.TO) said net income fell to US$112 million or 17 cents per diluted share in the third quarter, down from US$171 million or 27 cents per share a year earlier. Revenue declined to just under $3 billion from $3.2 billion in the third quarter of 2008. Revenue was in line with analyst estimates but EPS beat expectations by three cents per share. Brookfield shares gave back 44 cents to $22.76.

Overseas, Asian stocks climbed ahead of the release of the American jobs data.

Japan's Nikkei 225 stock average rose 0.7 per cent and Hong Kong's index gained 1.6 per cent.

London's FTSE 100 index moved down 0.59 per cent, the DAX lost 0.78 per cent and the Paris CAC 40 fell 0.9 per cent.