Broad advance sends TSX to record high; N.Y. weak on economic data

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - Strong gains by energy and mining companies sent the Toronto stock market into record high territory Thursday morning even as investors took in data which showed that a weakening U.S. economy is hurting manufacturers.

New York markets were slightly higher, held back by worries about factories and employment.

Toronto's S&P/TSX composite index jumped 185.83 points to 14,812.14. The index had breezed past its previous closing high of 14,625.76 from last July on Monday.

But analysts have cautioned that the rally since late January is narrowly based on commodity stocks along with a couple of market heavyweights such as Research In Motion Ltd. (TSX: RIM.TO).

The TSX Venture Exchange added 6.8 to 2,574.48 while the Canadian dollar moved up 0.38 cent to 99.95 cents US after Statistics Canada said factory sales retreated 1.6 per cent to $49 billion in March, the first monthly decline of 2008. A sharp downturn in motor vehicle sales was the chief contributor but there were declines in 18 of the 21 industries tracked.

"Manufacturing remains by far and away the weak spot in the Canadian economic landscape," said BMO Nesbitt Burns economist Doug Porter.

"This is holding broader Canadian GDP growth to a pace no better than its U.S. counterpart."

On Wall Street, the Dow Jones industrial average edged up 7.81 points to 12,906.19.

The Nasdaq composite index added 9.72 points to 2,506.42 as the tech sector got lift from efforts by billionaire investor Carl Icahn to oust Yahoo Inc.'s board of directors "unconscionable" actions that led Microsoft Corp. to withdraw a $47.5-billion takeover bid.

The S&P 500 ticked 3.11 points higher to 1,411.77 as the U.S. Labour Department reported that applications for jobless benefits rose by 6,000 last week to 371,000, in line with expectations.

There were also dismal American manufacturing numbers. The Federal Reserve said industrial production dropped 0.7 per cent last month. Big cutbacks in auto production contributed to the decline, which was more than double what economists had expected.

In corporate news, General Electric Co. is reportedly planning to sell its appliance business. The Wall Street Journal says GE has hired Goldman Sachs to run an auction for the unit, said to be worth up to US$8 billion.

On the retailing front, J.C. Penney said a pullback in consumer spending cut its first-quarter profit in half, and predicted "difficult" conditions for the entire year.

The TSX energy sector moved up one per cent as oil prices clawed back some of Wednesday's slippage. The June crude contract rose $1.49 to US$125.71 a barrel on the New York Mercantile Exchange.

Suncor Energy (TSX: SU.TO) was $1.49 higher to $64.86 and Canadian Natural Resources (TSX: CNQ.TO) advanced $1.81 to $99.46.

Gold prices headed up with the June bullion contract on the Nymex ahead $20.60 to US$887.10 an ounce, taking the gold sector in Toronto up 3.4 per cent as Barrick Gold Corp. (TSX: ABX.TO) improved $1.10 to $39.04 and Kinross Gold Corp. (TSX: K.TO) climbed 72 cents to $20.14.

The base metals sector was up 2.25 per cent. Teck Cominco Ltd. (TSX: TCK-B.TO) rose $1.45 to $50.80 and Equinox Minerals (TSX: EQN.TO) was ahead 12 cents to $4.74.

Lundin Mining Corp. (TSX: LUN.TO) shares rose 54 cents to $8.24 after its first-quarter profit rose 51 per cent to $78.8 million on higher copper and lead prices.

Financials were also supportive as Scotiabank (TSX: BNS.TO) climbed 62 cents to $49.37 and TD Bank (TSX: TD.TO) improved 73 cents to $68.30.

Allen-Vanguard Corp. (TSX: VRS.TO) shares were shot down 27 cents to $3.09 after the maker of protective gear and anti-roadside-bomb technology cut near-term expectations, citing delays in U.S. defence programs. The Ottawa-based company lost $34.2 million in its latest quarter, including expenses from recent acquisitions which boosted revenue to $91.3 million from $23.5 million.

Investment firm Sprott Inc. (TSX: SII.TO) closed a $200-million initial public offering, and in its first day of trading, the shares were down 29 cents to $9.71.

Overseas, Japan's Nikkei stock average rose 0.9 per cent, gaining 133.19 points to 14,251.74 as solid earnings from Sony bolstered confidence that Japanese exporters are coping with the shaky U.S. economy.

Hong Kong's Hang Seng index edged up 0.1 per cent.

European equity markets were little changed despite a stronger than expected report on euro-zone gross domestic product, which was up 0.7 per cent in the first quarter as Germany grew 1.5 per cent.

London's FTSE 100 was up 31.1 points to 6,247.1, the German DAX slipped 4.36 points to 7,078.88 and the Paris CAC-40 inched up 1.57 to 5,056.81.