Stocks rise as financial, consumer stocks gain; oil, Canadian dollar declines

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market closed higher Thursday, led by gains in consumer discretionary and bank stocks.

The S&P/TSX composite index spent much of the day little changed but momentum picked up late in the session and closed up 91.35 points at 11,533.37.

Sentiment improved after Wal-Mart said it expected sales to increase by one to two per cent in the current fiscal year and by four to six per cent next year.

Investors also drew encouragement from PNC Financial Services Group Inc. and Fifth Third Bancorp. Both U.S. banks said bad loans are not mounting as fast as they had been, and that pushed financial stocks higher.

The Canadian dollar was down 0.16 of a cent to 95.44 cents US as the Bank of Canada said it expected that the continuing strong dollar to undercut exports and hamper economic growth.

In other economic news, Statistics Canada said retail sales climbed 0.8 per cent in August to $34.5 billion, with the bulk of the increase coming from gasoline stations and new car dealers.

Otherwise, Canadian retail sales were flat in August.

The TSX consumer discretionary sector headed up 1.48 per cent, with shares in autoparts company Magna International (TSX: MG-A.TO) ahead 50 cents to $47.56 after Spain's industry minister said Magna and union leaders had reached an agreement over planned job cuts at an Opel plant in Spain, hopefully averting strike action.

Miguel Sebastian said Magna had agreed to reduce from 1,350 to 900 the number of jobs it will eliminate at the Opel car factory near Zaragoza, Spain, as part of its planned takeover of Opel from General Motors.

In the consumer staples sector, Shoppers Drug Mart gained 70 cents to $44.55.

TSX financials were supportive, up 1.5 per cent a day after an analyst's downgrade of Wells Fargo, the fourth-biggest U.S. bank, sent North American stock markets to a sharply lower close. TD Bank rose $1.44 to $65.64 while in New York, Wells Fargo shares were up $1.27 at US$30.17.

The TSX energy sector was ahead 0.49 per cent as oil prices backed away slightly from Wednesday's close above US$81 a barrel, the highest level in a year. The December crude contract on the New York Mercantile Exchange closed down 18 cents to US$81.19 a barrel. EnCana Corp. (TSX: ECA.TO) advanced 91 cents to $64.87.

Investors also took in major acquisition activity in the oilpatch. Canadian oil and gas producer Harvest Energy Trust (TSX: HTE-UN.TO) has agreed to a proposed takeover by state-owned Korea National Oil Corp. in a deal valued at $4.1 billion.

Harvest units surged $2.49 or 34.11 per cent to $9.79.

The gold sector was down 0.47 per cent as the December gold contract on the Nymex faded $5.90 to US$1,058.60 an ounce. Kinross Gold Corp. (TSX: K.TO) lost 46 cents to $22.73.

The base metals sector was ahead just over one per cent as December copper dipped 3.8 cents to US$2.998 a pound after charging ahead more than 10 cents Wednesday. Teck Resources (TSX: TCK-B.TO) gained 80 cents to $35.11.

Research In Motion Ltd. (TSX: RIM.TO) also gave the TSX a lift, rising $2.05 to $70.83.

The TSX Venture Exchange was 8.4 points lower at 1,334.19.

New York markets turned higher as investors also liked the tone of the latest batch of earnings reports.

The Dow Jones industrial average gained 131.95 points to 10,081.31.

The Nasdaq composite index was ahead 14.56 points to 2,165.29 and the S&P 500 was ahead 11.51 points to 1,092.91 following upbeat reports from Dow Jones industrial average components manufacturer 3M Co., insurer Travelers Cos., telecommunications provider AT&T Inc. and fast-food chain McDonald's Corp.

However, mixed earnings signals continue to show an economy in flux, and could give traders reason to pause in their relentless run-up in stocks that began in March.

"The market is way ahead of itself as far as the real economy is concerned and almost certainly we're due for a pullback," added Graham.

"The spin on this is oh, look, they're beating expectations. The fact that the expectations have been deliberately lowered and are very cautious and you're still down 20 per cent from where you were a year go, is neither here nor there. The market is quote, unquote beating the expectations," he said.

In other corporate news, TSX market heavyweight Potash Corporation of Saskatchewan Inc. shook off early losses, moving up 78 cents to $108.08 after it said continuing caution among buyers around the world pushed down third-quarter profits by nearly 80 per cent. Net income was US$248.8 million or 82 cents a share, a drop from $1.2 billion or $3.93 per share in the same period last year.

Sales fell to US$1 billion compared with US$3.1 billion in the same period last year.

Units in Precision Drilling Trust (TSX: PD-UN.TO) were up 39 cents to $7.98 as it saw third-quarter profit fall to $72 million, a 13 per cent decline from the same time last year attributed to slow drilling activity throughout the North American energy industry.

Cangene Corp.'s (TSX: CNJ.TO) shares jumped $1.84 or 40.44 per cent to $6.39 after it reported profit rose year over year to $59.9 million - its highest ever annual net income. The showing represented a gain of 102 per cent from a year earlier, helped by a dramatic increase in deliveries on U.S. government contracts.