Stocks to open higher after Bernanke declares U.S. recession "likely over"

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market looked to open higher Wednesday, supported by gold stocks as bullion prices ran ahead on a weaker U.S. dollar.

New York markets also headed for a stronger open a day after Federal Reserve chairman Ben Bernanke said the U.S. recession was likely over.

The Dow Jones industrial futures were ahead 47 points to 9,650, the Nasdaq futures rose 4.5 points to 1,699.5 and the S&P 500 futures gained 5.2 points to 1,051.1.

The December bullion contract on the Nymex gained $11.20 to US$1,017.50 an ounce. December copper was up four cents to $2.88 a pound.

Energy stocks will likely be weak in early trading as the October crude contract on the New York Mercantile Exchange lost 23 cents to $70.70 a barrel after the American Petroleum Institute said Tuesday that U.S. oil inventories rose last week, more evidence demand remains tepid.

The Canadian dollar moved up 0.12 of a cent to 93.46 cents US, after rising more than a cent Tuesday amid yet another warning from the Bank of Canada that the strong loonie could derail a strong economic recovery.

The TSX has racked up four consecutive days of solid gains on hopes for a strong recovery and a positive third-quarter earnings season, leaving the market up 52 per cent since the lows of early March and up 28 per cent year to date.

While Bernanke indicated an end to the recession, investors are still looking for confirmation of renewed growth in the U.S. A report on industrial activity is likely to show output at the nation's factories, mines and utilities rose in August, due to a jump in production at auto plants.

Investors will also get insight into inflation trends for the second straight day. The Commerce Department releases its consumer price index, a measure of prices at the retail level and economists predict inflation rose 0.3 per cent after a flat July. Excluding volatile food and energy prices, economists expect a 0.1 per cent increase.

Statistics Canada will release the August reading on Canadian inflation on Thursday. Economists were forecasting a month to month increase of 0.1 per cent, due largely to higher gasoline prices.

The agency's report on July manufacturing sales comes out Wednesday and a gain of 2.5 per cent from June has been forecast.

Optimism about the U.S. economy helped drive Asian markets higher. Japan's benchmark Nikkei 225 index gained 0.5 per cent, with stocks helped by hopes the country's incoming government, set to be inaugurated later in the day, won't make big changes to economic policies.

Hong Kong's Hang Seng was up 2.6 per cent.

Only China's market, which is relatively closed to foreign investors and often moves out of step with global stocks, was lower. The Shanghai benchmark fell 1.1 per cent.

London's FTSE 100 index gained 1.44 per cent, Frankfurt's DAX advanced 0.92 per cent while the Paris CAC 40 was up 1.4 per cent.

In corporate news, the Globe and Mail reported that Magna International Inc.'s (TSX: MG-A.TO) has been told by BMW, the auto parts giant's second-largest customer, that the close relationship between the two companies could be in jeopardy. It said that the German automaker fears Magna will go from parts supplier to competitor if the Canadian company fulfills its goal of leaping into the ranks of mass producers through an ownership stake in Adam Opel GmbH.

Harry Winston Diamond Corp. (TSX: HW.TO) says a winter shutdown at the Diavik mine in Canada's North won't be necessary after all. The shutdown had been scheduled in response to the global economic recession that began about a year ago.