TSX firmly positive at late morning as commodity prices continue to climb

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(The Canadian Press)

By Kristine Owram, The Canadian Press

TORONTO - The Toronto stock market moved firmly into positive territory in late morning trading Wednesday as commodity prices continued a steady upward climb.

The S&P/TSX composite index added 68.80 points to 11,316.77 after gaining close to 300 points or 2.6 per cent in the first two days of trading this week.

This week's rally has come amid sharply higher commodity prices and investor confidence that the economic rebound has staying power.

The price of gold continued its upward climb after closing at a record high Tuesday, gaining $4.10 to US$1,043.8. The Toronto gold sector was up 0.5 per cent.

Meanwhile, the November crude oil contract added three cents to US$70.91. The energy sector was up 0.1 per cent.

The loonie, which gained a full two cents against the U.S. dollar in the first two days of trading this week, slipped 0.08 cent to 94.30 cents US.

The TSX Venture Exchange gained 5.14 points to 1,286.54.

With few economic reports due out the rest of the week, quarterly earnings will take centre stage when aluminum company Alcoa Inc. (NYSE: AA) reports results after the market closes Wednesday, officially kicking off the third-quarter earnings season.

Earnings will provide insight into just how strong any economic rebound has been so far. During the second quarter, companies largely beat modest earnings expectations by cutting costs and streamlining operations. That helped fuel the market's rally throughout the summer.

Now investors will be looking for actual growth in revenue and sales as the driver of earnings. That would indicate companies are starting to get their footing again and consumers are back to buying goods and services.

Paul Thornton of Investor Boot Camp Online said the economic rebound has come far enough that this earnings season should see some companies rebound substantially.

"I do think there is probably a fair bit of anticipation and maybe anxiety about earnings season in this quarter because we are getting to a pivotal point here with earnings where we're going to really see which sectors companies are continuing to suffer from the recession and which ones are rebounding and are the true high-growth companies," Thornton said.

In New York, markets were also flat as investors took profits from the two-day surge. The Dow Jones industrial average lost 13.53 points to 9,717.72. The Nasdaq composite index added 2.54 points to 2,106.11 while the S&P 500 edged up 2.54 points to 1,055.71.

On Tuesday, stocks were buoyed by news that Australia's central bank raised interest rates by a quarter point. The move made Australia the first major economy to increase the cost of borrowing amid signs its recovery from the global slump is gaining momentum.

However, optimism on international markets was tempered Wednesday after a report that second-quarter growth in the 16-nation euro-zone fell by 0.2 per cent compared to the first quarter of 2009.

In Canadian corporate news, Ciena Corp. (Nasdaq: CIEN) is offering cash and stock worth US$521 million to acquire some of Nortel Network Corp.'s most prized remaining business units.

The deal covers the Nortel Optical Networking and Carrier Ethernet businesses, which include the rights to technology that enhances the speed and capacity of current fibre optic networks by as much as 10 times.

In the mining sector, Gammon Gold Inc. (TSX: GAM.TO) said it's planning a US$100-million stock offering to fund debt repayment, exploration and its Guadalupe y Calvo project. The new shares will be priced at US$8.90 Gammon's publicly traded shares fell 47 cents or 4.8 per cent to C$9.43.

And Air Canada (TSX: AC-B.TO) shares plunged 38 cents or 20.7 per cent to $1.46 after the company said it will raise $260 million in an equity offering that will be used for working capital and general corporate purposes.

Under the bought deal led by Genuity Capital Markets and TD Securities Inc., Air Canada will issue 160.5 million units at a price of $1.62 per unit.

Overseas, Britain's FTSE 100 fell 0.1 per cent, Germany's DAX index added 0.2 per cent, and France's CAC-40 gained 0.3 per cent.