Commodity stocks take TSX up, oil prices advance; earns lift N.Y.

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - Rising mining stocks gave the Toronto stock market a minor gain late-morning Wednesday amid positive earnings news from the American tech and financial segments.

The S&P/TSX composite index inched up 8.7 points to 11,546.8. Performance has been muted on the TSX in recent days despite a steady parade of well-received U.S. earnings reports.

But analysts point out that the TSX is up more than 50 per cent from the lows of early March as investors forecast that earnings and economic performance would justify such a sharp runup.

Now, it may be time for markets to consolidate those strong gains.

"Expectations were already built into the market, I think," said Phillip Petursson, director of institutional equities at MFC Global Investment Management.

"I think a more realistic scenario - and the optimistic scenario - is that we only trade sideways over the next little while as earnings continue to catch up with expectations."

The Canadian dollar made headway a day after losing almost two cents. The slide was triggered by the Bank of Canada, which announced it was keeping its key rate at 0.25 per cent, strongly indicated a rate hike won't happen until the middle of next year - and delivered a clear warning of the damage being done to the economy by the surging currency.

On Wednesday, the loonie was ahead 0.23 of a cent to 95.4 cents US.

The base metals sector was up 1.3 per cent as the December copper contract on the Nymex was ahead three cents at US$2.97 a pound. Teck Resources (TSX: TCK-B.TO) gained 49 cents to C$34.85.

December gold moved up $2.70 to US$1,061.30 an ounce and the gold sector edged up 1.06 per cent. Barrick Gold Corp. (TSX: ABX.TO) advanced 82 cents to $40.48.

The energy sector was flat as the December crude contract on the New York Mercantile Exchange moved ahead 64 cents to US$79.76 a barrel as U.S. gasoline inventories fell by 2.3 million barrels last week.

Crude has been running up sharply over the past week to around US$80 - a level that could start causing problems for the pace of an economic revival.

"It's going to eat into spending, into the economy absolutely," added Petursson.

"It drives margins down because basically transportation is a part of just about everything - not only on the consumer side but also in goods manufacturing."

The TSX Venture Exchange moved up 3.11 points 1,342.7.

New York's Dow Jones industrial average rose 38.5 points to 10,080.

The Nasdaq composite index gained 14.21 points to 2,177.68, supported by a well-received earnings report from Yahoo Inc., while the S&P 500 index added 6.15 points to 1,097.2.

Morgan Stanley was an investor favourite, up $2.18 to US$34.70 as the U.S. bank returned to profitability for the first time in a year as stock and debt underwriting by its investment banking division more than offset US$400 million in losses from commercial real estate

The New York-based bank says it earned $498 million, or 38 cents per share, well over expected earnings of 27 cents per share.

And Yahoo Inc. reported after Tuesday's close that it more than triple its third-quarter profit from last year to top analysts' relatively low expectations for the troubled Internet company.

But the results released Tuesday also showed Yahoo's revenue fell by at least 12 per cent for the third consecutive quarter. That revenue rut means Yahoo still has a long way to go on its comeback trail but its shares rose 79 cents to US$17.96.

Boeing said lost US$1.6 billion in its third quarter because of problems with its long-delayed 787 and a new version of its 747 jumbo jet. That prompted the airplane maker to slash its profit forecast for 2009 and its shares lost 46 cents to US$51.43.

Elsewhere in the industrials sector, Canadian National Railways (TSX: CNR.TO) said after the market close Tuesday that quarterly profits dropped 16.4 per cent to $461 million. Revenue fell 18 per cent to $1.85 billion.

CN Rail (TSX: CNR.TO) announced Wednesday it has ordered 70 new high-horsepower locomotives from General Electric and Electro-Motive Diesel Inc. Financial details were not disclosed and its shares traded down $1.02 to $54.02.

In other corporate news, Jaguar Financial Corp. (TSX: JFC.TO) says it opposes a proposed $192-million takeover of nickel mine developer Canadian Royalties Inc. (TSX: CZZ.TO) by Jien Canada Mining Ltd. Jaguar says holders of Canadian Royalties debentures should receive all of their principal plus a premium, not 80 cents on the dollar as proposed by Jien. Canadian Royalties shares lost three cents to 76 cents.

Inter Pipeline Fund (TSX: IPL-UN.TO) has boosted monthly distributions to 7.5 cents from seven cents a unit. It also raised distributions on an annualized basis to 90 cents from 84 cents after an operating and financial review. Its units rose 19 cents to $10.34.

Asian stock markets faltered Wednesday as weak U.S. housing starts data Tuesday tempered optimism about better-than-expected corporate earnings.

Japan's market bucked the trend with the benchmark Nikkei 225 stock average recouping early losses to rise 0.1 per cent.

Hong Kong's Hang Seng dropped 0.1 per cent and China's Shanghai benchmark fell 0.2 per cent.

London's FTSE 100 index was ahead 0.34 per cent, Frankfurt's DAX gained 0.65 per cent while the Paris CAC 40 rose 0.33 per cent.