Stocks higher ahead of key earns; TSX gets lift from Chinese growth optimism

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market was modestly higher mid-morning Monday as a bullish comment on Chinese growth supported mining stocks and traders looked to the next wave of U.S. earnings reports.

The S&P/TSX composite index gained 30.9 points to 11,535.7. The TSX Venture Exchange was off 1.17 points to 1,330.4.

Potash Corp. (TSX: POT.TO) was also a source of lift on the TSX, rising $5 to $106.12 after Bank of America Merill Lynch said that BHP Billiton, the world's biggest mining company, could boost earnings and cut excess cash by purchasing the Canadian fertilizer giant at a 30 per cent premium to the share price.

The base metals sector rose 1.2 per cent as a top Chinese economic official said the country would surpass its growth target of eight per cent this year. HudBay Minerals (TSX: HBM.TO) climbed 14 cents to $15.22.

"Achieving a growth rate of eight per cent for the year is basically no problem," Xiong Bilin, a deputy director of the National Development and Reform Commission, told reporters in Beijing.

The December copper contract on the New York Mercantile Exchange gained six cents to US$2.90 a pound.

China's Sichuan Hanlong Group has agreed to arrange up to $518 million in debt funding and to purchase a $145.1-million stake in Moly Mines Ltd. (TSX: MOL.TO), which is developing the Spinifex Ridge molybdenum and copper project in Australia. Moly shares jumped 16 cents or 12.3 per cent to C$1.37 on the TSX.

The energy sector was up 0.3 per cent Monday morning as the November crude contract on the New York Mercantile Exchange dipped three cents to US$78.55 a barrel after a report last Thursday showed an unexpected drawdown of gasoline inventories and pushed crude prices to their highest levels in a year.

The gold sector was the leading decliner, down 0.8 per cent as the December bullion contract declined $1.30 to US$1,050.20 an ounce. Barrick Gold Corp. (TSX: ABX.TO) faded 38 cents to C$39.81.

A day before the Bank of Canada makes its next announcement on interest rates, the Canadian dollar slipped 0.05 of a cent to 96.27 cents US. The central bank is expected to leave its key rate unchanged at 0.25 per cent.

New York markets were also higher after earnings reports from the likes of Goldman Sachs Group and Google Inc. sent markets higher last week. But disappointing earnings from General Electric, Citigroup Inc. and Bank of America Inc. chilled some of investors' optimism.

The Dow Jones industrial average rose 44.1 points to 10,040.

On Monday, toy maker Hasbro Inc. reported higher third-quarter profits which met expectations but the company missed on revenue and its shares fell $1.37 to US$28.15. Later in the day, Apple Inc. and Texas Instruments Inc. are scheduled to release earnings.

The Nasdaq composite index moved 1.54 points higher to 2,158.34 while the S&P 500 index was up 1.54 points to 1,158.34.

In other corporate news, fertilizer company Agrium Inc. (TSX: AGU.TO) is to sell half of its Carseland nitrogen facility to U.S.-based Terra Industries Inc. for US$250 million (C$258 million). The deal is conditional on the closing of Agrium's proposed takeover of U.S. CF Industries Holdings Inc. Agrium shares rose $1.55 to $56.90.

The Canadian company that invented the Visudyne treatment for age-related blindness will soon take over U.S. sales and marketing of its lead product from the Swiss pharmaceutical giant that has had the worldwide rights.

Vancouver-based QLT Inc. (TSX: QLT.TO) and Novartis Pharma AG have reworked their agreement on Visudyne so that the Canadian company will start marketing and selling the product in the United States starting Jan. 1, 2010. QLT shares rose nine cents to $4.19.

A Spanish labour representative says unions have rejected the latest offer from Canadian auto parts make Magna International (TSX: MG-A.TO) concerning the future of an Opel plant targeted for job cuts and will vote on calling a strike. A consortium led by Magna agreed in September to acquire Opel from General Motors. Magna has said it wants to lay off 1,350 workers and shift part of the factory's production to Germany and its shares advanced 44 cents to $47.37.

European and Asian stocks rose Monday as investors looked ahead to U.S. corporate earnings reports with increased optimism over the strength of the economic recovery.

Germany's DAX stock index rose 1.07 per cent, Britain's FTSE 100 rose 0.49 per cent and France's CAC-40 gained one per cent.

China's Shanghai index rose 2.1 per cent, Hong Kong's Hang Seng closed up 1.2 per while Tokyo's Nikkei 225 shed 0.2 per cent.