TSX rises on hopes for Chinese economy, Potash takeover speculation; N.Y. higher

By Malcolm Morrison, The Canadian Press

TORONTO - Energy and mining stocks helped the Toronto stock market make a modest advance late-morning Monday as investors felt reassured about Chinese economic growth and looked to the next wave of U.S. earnings reports.

The S&P/TSX composite index gained 35.8 points to 11,540.6. The TSX Venture Exchange was up 1.57 points to 1,333.14.

Potash Corp. (TSX: POT.TO) was also a source of lift on the TSX, rising $4.99 to $106.11 after Bank of America Merrill 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.

"This is just part of what you always see at a time when demand is strong or companies are trying to position themselves well for future growth," said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis.

"It's not too surprising that you might see a variety of companies thinking that being in, not just industrial metals and precious metals, but in agricultural commodities as well, would be a logical thing to do."

The base metals sector rose 0.7 per cent as a top Chinese economic official said the country would surpass its growth target of eight per cent this year. Equinox Minerals (TSX: EQN.TO) climbed 21 cents to C$4.14.

"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.

"As long as people believe that China is continuing to grow at that kind of pace, it will lead to expectations of stronger resource usage in the future," added Warne.

The December copper contract on the New York Mercantile Exchange gained eight cents to US$2.92 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 0.5 per cent Monday morning as the November crude contract on the New York Mercantile Exchange dipped 23 cents to US$78.30 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. Suncor Inc. (TSX: SU.TO) was ahead 47 cents to $40.45.

The gold sector was the leading decliner, down one per cent as the December bullion contract climbed $2 to US$1,053.50 an ounce. Goldcorp Inc. (TSX: G.TO) faded 37 cents to C$43.66.

A day before the Bank of Canada makes its next announcement on interest rates, the Canadian dollar gained 0.36 cent to 96.68 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 82.8 points to 10,078.7.

On Monday, toy maker Hasbro Inc. reported higher third-quarter profits which met expectations but the company missed on revenue and its shares fell $1.06 to US$28.46. Later in the day, Apple Inc. and Texas Instruments Inc. are scheduled to release earnings.

The Nasdaq composite index moved 12.04 points higher to 2,168.84 while the S&P 500 index was up 7.7 points to 1,168.42.

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 $2.92 to $58.27.

Toromont Industries Ltd. (TSX: TIH.TO) made a cash-and-stock bid Friday for Enerflex Systems Income Fund (TSX: EFX-UN.TO) that valued the income trust at about $597 million. Under the offer announced after the close of markets Friday, Toromont offered $13.50 per unit for Enerflex with at least half of the offer to be made in cash. Toromont shares rose 78 cents to $23.38 while Enerflex units soared $3.97 or 39.4 per cent to $14.04.

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 51 cents to $47.44.

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 1.8 per cent, Britain's FTSE 100 rose 0.85 per cent and France's CAC-40 gained 1.55 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.