TSX closes lower as RIM shares sell off; N.Y. lower on weak economic data

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market closed lower Friday and lost ground for the week, weighed down by a selloff by BlackBerry maker Research In Motion Ltd. (TSX: RIM.TO) after the market heavyweight delivered a disappointing earnings report.

The S&P/TSX composite index lost 73.37 points to 11,212.39, with market support coming from mining and consumer stocks in particular.

The TSX lost 233.56 points or 2.04 per cent this week amid worries about the sustainability of this year's rally in the wake of a sharp drop in Canadian retail sales in July, a slide in American durable goods orders and housing news that reminded investors that a recovery in the housing sector will be difficult.

But markets have been resilient despite rising more than 50 per cent since the lows of early March, punctuated by short pauses for profit taking before moving higher.

"We've been of the view for a while that the market wants to go higher," said Stephen Uzielle, portfolio manager at ScotiaMcLeod Equity Advisory.

"It will have some bad days as it takes a breather, or the news isn't quite as positive as what people were looking for, but it won't be sort of allowed to pull back any significant degree because there's so much cash on the sidelines, it's looking to buy (into) the dips."

RIM shares tumbled $15.12 or 16.77 per cent to $75.04 after coming up short on expectations for revenue, new subscribers and outlook.

Its revenue came in at $3.53 billion, well below the $3.62 billion that was expected. Meanwhile, RIM reported a net increase of 3.8 million BlackBerry subscribers in the quarter, which was less than the four million new clients that analysts had been looking for. Its third-quarter revenue and earnings both missed analyst expectations.

Some analysts argued that RIM didn't deserve such a smackdown, but "that's the nature of markets," said John Stephenson, portfolio manager at First Asset Funds Inc.

"I think what the market is missing is (that) they still are a leader in terms of handsets, certainly within North America."

He added that RIM is a better bargain than iphone maker Apple Inc., observing that "the multiple of RIM is quite a few points below Apple, it represents a much better value, especially today."

The Canadian dollar was 0.23 of a cent lower to 91.6 cents US.

The energy sector was ahead 0.38 per cent as oil prices rose slightly after demand concerns shaved almost $6 a barrel over the previous two sessions. The November crude contract on the new York Mercantile Exchange was up 13 cents to US$66.02 a barrel. Canadian Natural Resources (TSX: CNQ.TO) was ahead 67 cents to $72.51.

Compton Petroleum Corp. (TSX: CMT.TO) shares rose 11 cents to $1.30 after it said its $150-million equity offering has been delayed, pending receipt of a "no-objection" letter from the U.S. Financial Industry Regulatory Authority.

The base metals sector was ahead one per cent as December copper added three cents at US$2.74 a pound. HudBay Minerals (TSX: HBM.TO) continued to run up sharply after announcing Tuesday it has evidence of a major new copper-gold zone near its Snow Lake concentrator in the Flin Flon area of northern Manitoba. Its shares were ahead $1.59 or 13.96 per cent to $12.98, up sharply from Monday's close of $9.37.

The TSX Venture Exchange was up 3.28 points to 1,259.64.

New York markets were lower following more U.S. economic data that cast further doubt on the strength of an economic recovery.

The Dow Jones industrials index was down 42.25 points to 9,665.19 after the U.S. Commerce Department reported that orders for durable goods dropped 2.4 per cent in August, after increasing a revised 4.8 per cent in July, a far worse showing than the 0.5 per cent increase that investors had expected.

Excluding aircraft and other transportation goods, orders were flat in August, also below analysts' expectations of a 0.5 per cent rise.

And new U.S. home sales posted a tepid 0.7 per cent increase last month, which missed Wall Street expectations.

While it was the fifth straight increase and the strongest report in 11 months, sales were down 4.3 per cent from the same month last year.

The Nasdaq composite index was weighed down by RIM's earnings report, falling 16.69 points to 2,090.92, while the S&P 500 index declined 6.4 points to 1,044.38.

Investors looked past an improvement in the Reuters/University of Michigan consumer sentiment index, which rose to 73.5 in September from 65.7 in August. The index stands at the highest level since the start of 2008.

Elsewhere in the commodity sector, the December gold contract on the Nymex declined $7.30 to US$991.60 an ounce, taking the gold sector down 0.76 per cent. On the TSX, Goldcorp Inc. (TSX: G.TO) faded 90 cents to C$42.05.

Strength came from the consumer staples sector with Shoppers Drug Mart (TSX: SC.TO) up 64 cents to $44.20 and convenience store chain Alimentation Couche Tard Inc. (TSX: ATD-B.TO) 67 cents higher at $19.30.

The financial sector was flat but Scotiabank (TSX: BNS.TO) ran ahead 61 cents to $47.69.

Manulife-Sinochem Life Insurance Co. Ltd., a joint venture led by Canada's largest insurance company (TSX: MFC.TO) and the China Foreign Economic and Trade Trust & Investment Co., has received regulatory approval to expand its presence in China.

The subsidiary of Manulife Financial Corp. has received approval from the China Insurance Regulatory Commission to operate in Tianjin, a province southeast of Beijing with a population of 11.8 million people. Manulife-Sinochem will now operate in 11 Chinese provinces. Still, Manulife shares declined 28 cents to $21.72.