Canadian dollar surges, TSX little changed even as oil prices rise; N.Y. mixed

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - Rising commodity prices, a weak U.S. currency and a strong employment report for last month combined Tuesday to send the Canadian dollar to its highest level since the late summer of 2008.

The loonie was at 96.85 cents US at mid-morning, up 1.1 cents US from the previous official close on Friday after going as high as 97.47 cents US, its highest level since August 2008. The currency also surged 3.37 cents US last week.

Meanwhile, the Toronto stock market was little changed following the Canadian Thanksgiving holiday, as investors stepped back following sharp gains last week. The rapid rise in the Canadian dollar could also give them pause, since a stronger currency could slow a recovery in many sectors of the economy.

The S&P/TSX composite index added 2.8 points to 11,439.7.

The energy sector was strongest, up one per cent as the November crude contract on the New York Mercantile Exchange jumped 68 cents to US$73.95 a barrel on top of Monday's rise of $1.50 amid expectations of stronger demand during the winter.

Suncor Inc. (TSX: SU.TO) gained 56 cents to $38.16.

Tech and industrial stocks led the way down with Research In Motion Ltd. (TSX: RIM.TO) down $1.16 to $70.63 while Canadian National Railways (TSX: CNR.TO) declined 95 cents to $52.95.

Other commodity prices also advanced with December gold on the Nymex ahead $3.50 to US$1,061 an ounce while copper backed off eight cents at US$2.78 a pound.

The weakening U.S. dollar makes commodities priced in the U.S. currency - cheaper for international buyers and investors and increases their appeal as protection against inflation.

American companies may also find the weaker U.S. dollar helps their products to be more competitive on world markets, putting pressure on rivals in Canada and other countries.

Apart from the greenback's fall against other currencies, the Canadian dollar also benefited from Friday's Statistics Canada report on September employment showing a second straight healthy gain in net new positions, up 31,000, while the unemployment rate fell to 8.4 per cent.

The TSX Venture Exchange rose 13.52 points to 1,320.87.

U.S. markets were mixed following recent strong gains with the Dow Jones industrials down 18.8 points to 9,867.

The Nasdaq composite index rose 5.06 points to 2,144.2 while the S&P 500 index fell 2.15 points to 1,074.05.

Both the Toronto and New York markets gained about four per cent last week, driven by higher oil prices and expectations for upbeat earnings reports, stoked by solid profits at companies like Alcoa Inc. and Royal Philips Electronics.

Investors want to see signs that businesses and consumers are picking up their spending and that companies have been able to drive higher profits through revenue growth, not just through deep cost cuts, which helped boost income in the second quarter.

On Tuesday, health care giant Johnson & Johnson posted a one per cent increase in third-quarter profit and beats Wall Street expectations, even though generic competition reduced its sales.

The maker of Band-Aids, biotech drugs and Acuvue contact lenses just missed the revenue forecast, reporting total sales of US$15.08 billion. That's down five per cent from a year ago and its shares declined $1.28 to US$61.25 in New York.

In corporate news, mining giant Rio Tinto announced it will double its interest in Ivanhoe Mines (TSX: IVN.TO) to 19.7 per cent. Ivanhoe says it will use the proceeds of Rio Tinto's US$388 million investment to advance the Oyu Tolgoi copper-gold mining complex in Mongolia. Ivanhoe shares gained nine cents to $13.09.

General Motors could finalize the sale of its German auto unit Opel as early as this week, about a month ahead of schedule, the U.S. automaker's CEO Fritz Henderson said Tuesday.

Despite labour union objections over possible job losses, the sale of GM's Opel and Vauxhall units to Canadian autoparts supplier Magna International Inc., (TSX: MG-A.TO) which along with Russia's state-owned Sberbank acquired a 65 per cent stake in the German-based Opel from General Motors Co. last month, is expected to go ahead, Henderson told reporters.

Magna shares were down 84 cents to $45.73.

NAL Oil & Gas Trust (TSX: NAE-UN.TO) has agreed to acquire Calgary-based Breaker Energy Ltd. (TSX: WAV.TO) in a deal valued at $403 million.

The Breaker deal, which is expected to close early December, will be the fourth significant transaction for NAL Oil & Gas this year.

NAL also acquired Alberta Clipper and Spearpoint Energy and entered a joint venture to develop the Cardium oil play. NAL shares added a penny to $12.55 while Breaker shares rose nine cents to $5.79.

Norbord Inc. (TSX: NBD.TO), a troubled wood panel manufacturer controlled by Brookfield Asset Management (TSX: BAM-A.TO), said Tuesday it plans a reverse stock split that will reduce the number of shares outstanding.

Norbord's shareholders will receive one consolidated share for every 10 they hold prior to the transaction, effective Oct. 16 and its shares fell 12 cents to $1.50.

Overseas, most Asian stock markets advanced with Japan's Nikkei 225 stock average up 0.6 per cent while Hong Kong's Hang Seng rose 0.8 per cent.

Shanghai's benchmark was up 1.4 per cent.

London's FTSE 100 index was off 0.21 per cent, Frankfurt's DAX was down 0.56 per cent and the Paris CAC 40 slipped 0.6 per cent.