Hopes for solid corporate earnings helps drive TSX higher; N.Y. also advances

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market advanced late morning Monday amid gains in all sectors after investors took some profits last week.

The S&P/TSX composite index climbed 57.5 points to 11,439.7 after dropping just over one per cent last week as investors looked optimistically to a tide of earnings from big Canadian companies this week.

The Canadian dollar continued to back away after Bank of Canada governor Mark Carney reiterated late last week that the currency's recent sharp rise threatens to derail the economic recovery. And he made it clear that intervention in currency markets to control that surge is a possibility.

On Monday, Carney warned that governments won't allow the world's bankers to return to their irresponsible ways and added financiers had better get ready for major changes to the way they do business.

The loonie was down 0.36 cent to 94.71 cents US.

The weak U.S. dollar continued to support oil prices above the US$80 a barrel mark as the December crude contract on the New York Mercantile Exchange advanced eight cents to US$80.58 a barrel. The TSX energy sector was ahead 0.83 per cent and Canadian Natural Resources (TSX: CNQ.TO) rose 86 cents to C$75.29.

Other commodities turned weak.

The base metals sector advanced 1.7 per cent as December copper was unchanged at US$3.04 a pound. Teck Resources (TSX: TCK-B.TO) climbed 72 cents to $35.53.

The December bullion contract on the Nymex gained slipped $1.80 to US$1,054.60 an ounce, but the gold sector was still up 0.66 per cent.

Iamgold Corp. (TSX: IMG.TO) shares gained 36 cents to $14.85 as the company increased its 2009 production guidance by 3.3 per cent to between 940,000 and 950,000 ounces of gold at an average cash cost of between $460 and $470 per ounce.

Tech stocks also attracted investors as Research In Motion Ltd. (TSX: RIM.TO) moved up $1.30 to $70.50 and Celestica Inc. (TSX: CLS.TO) was up 30 cents to $9.26.

The main index is close to its highs for the year and is up more than 50 per cent since the lows of early March.

Analysts think a positive earnings season is just the thing to give markets another lift, pointing to a recent series of strong U.S. reports that should be reflected in Canada.

"I'm going to say 80 or 90 per cent of companies in the U.S. are meeting or exceeding targets," said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier, observing that "the bar has been set quite low".

"Now there are some of course that aren't - but I don't think it's going to be much different for Canadians."

Nakamoto added he thinks banks in particular will do well "earnings driven by capital markets activity and they won't have the big writedowns of structured products and so forth."

In the coming week investors will take in reports from Canadian market heavyweights including utility TransAlta Corp. (TSX: TA.TO), Canadian Pacific Railway (TSX: CP.TO), Imperial Oil (TSX: IMO.TO) and Nexen Inc. (TSX: NXY.TO).

The TSX Venture Exchange was off 1.83 points to 1,332.08.

New York indexes were also higher as investors also await the U.S. government's first reading on the economy in the third quarter later in the week.

The Dow Jones industrial average was ahead 58.4 points to 10,030.6.

The Nasdaq composite index rose 25.24 points to 2,179.71 while the S&P 500 index was up 8.75 points to 1,088,35.

The U.S. Commerce Department's report on third-quarter gross domestic product, the broadest measure of the economy's health, is due out on Thursday. Economists predict the economy grew at an annual rate of 3.2 per cent in the quarter, according to Thomson Reuters. That would mark the first quarter of growth after four straight declines.

In other corporate news, former Walt Disney Co. chairman Michael Eisner and Canadian media and communications company Rogers Communications (TSX: RCI-B.TO) have formed an investment and distribution partnership. As part of the deal, Rogers will have the exclusive Canadian rights to future projects from the new web video studio called Vuguru. Financial terms of the agreement aren't known.

Shares in Rogers, which reports its latest quarterly results Tuesday, advanced 12 cents to $29.01.

CI Financial Corp. (TSX: CIX.TO) shares gained 23 cents to $19.92 as it announced it is selling investment dealer Blackmont Capital Inc. to Australian-based Macquarie Group. for $93.3 million.

CI Financial says it will keep Blackmont's capital markets division, which provides market research and producing analyst reports on stocks and other investments.

Blackmont operates a network of about 130 investment advisers who provide services to retail investors.

Jien Canada Mining Ltd. says it still holds the best offer to take over Canadian Royalties Inc. (TSX: CZZ.TO) in a $192-million proposed deal and urged securityholders Monday to tender securities before the Oct. 27 deadline. Jaguar Financial (TSX: JFC.TO) has said it will attempt to block the deal because debtholders would receive only 80 per cent of their principal back, not 101 per cent as required under the debt agreements. Canadian Royalties shares jumped four cents to 70 cents.

Asian stocks closed higher as South Korea's central bank said economic growth accelerated to 2.9 per cent in the third quarter from the previous quarter - the fastest growth since the first quarter of 2002.

Japan's Nikkei 225 stock average rose 0.8 per cent, South Korea's Kospi advanced one per cent, Hong Kong's market was closed for a holiday and China's Shanghai benchmark gained 0.1 per cent.

London's FTSE 100 index gained 0.41 per cent, Frankfurt's DAX gained 0.58 per cent while the Paris CAC 40 was ahead 0.52 per cent.