TSX rises on higher commodities, Bombardier Chinese railroad deal

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market was sharply higher late Monday morning, clawing back more than half of last week's steep decline.

The S&P/TSX composite index gained 142.9 points to 11,355.3 as investors, confident of a solid economic recovery, sent all sectors higher after the TSX dropped two per cent last week.

"I think the market has motored through all the resistance levels - whenever you thought there was going to be a 10 or 15 per cent pullback, you have been disappointed," said Gavin Graham, director of investments at BMO Asset Management.

The industrials component led advancers, with Bombardier Inc. (TSX: BBD-B.TO) shares up 37 cents or eight per cent to $4.94 after a joint venture led by the Montreal-based transportation giant was awarded a US$4-billion contract to build 80 high-speed trains for China's railway ministry. The new trains will use some of the Canadian company's most advanced technologies.

Bombardier's share of the contract is estimated at 13.5 billion Chinese yuan or US$2 billion.

Elsewhere in the sector, Canadian Pacific Railway (TSX: CP.TO) advanced 95 cents to $51.10.

The energy sector was ahead 1.1 per cent as the November crude contract on the New York Mercantile Exchange gained 77 cents to US$66.79 after losing $6.47 or almost nine per cent last week on demand concerns. Canadian Natural Resources (TSX: CNQ.TO) ran up 91 cents to $73.42.

The Canadian dollar was up 0.08 of a cent to 91.68 cents US ahead of an economic update being delivered later in the day by Prime Minister Stephen Harper in Saint John, N.B.

The TSX Venture Exchange was ahead 7.48 points to 1,267.12.

New York markets also moved ahead amid major merger and acquisition news after losing ground last week.

The Dow Jones industrials were up 126.3 points to 9,791.5 after sliding 1.57 per cent last week in the wake of disappointing durable goods and housing data.

The Nasdaq composite index climbed 40.88 points to 2,131.8 while the S&P 500 index gained 15.9 points to 1,060.3.

Xerox Corp. said Monday it is buying the business processing company Affiliated Computer Services for about US$5.75 billion but its shares tumbled $1.46 or 16.35 per cent to US$7.52.

Abbott Laboratories said it would buy the pharmaceutical business of Belgian chemicals maker Solvay for US$6.6 billion. Abbott shares were ahead $1.56 to US$49.89.

Meanwhile, the December bullion contract on the Nymex gained $3.20 to US$994.80 an ounce, taking the TSX gold sector up 2.12 per cent, with Goldcorp Inc. (TSX: G.TO) ahead 89 cents to $42.94.

The base metals sector was ahead 1.7 per cent even as December copper declined four cents to US$2.70 a pound. Teck Resources (TSX: TCK-B.TO) gained 69 cents to $29.10.

The financials sector rose 1.4 per cent with Bank of Montreal (TSX: BMO.TO) ahead 91 cents to $53.96.

Investors are waiting for critical economic data this week to help them determine what direction the market should take. The key report comes Friday when the U.S. Labour Department provides its monthly reading on employment.

Economists are looking for the U.S. economy to have cut another 188,000 jobs in September.

They also expect the unemployment rate will show a rise to 9.8 per cent in September, from 9.7 per cent a month earlier.

Canadian unemployment data for September is released on Friday, Oct. 9.

Other key economic data this week includes the U.S. ISM manufacturing index on Thursday and September auto sales, also coming out on Thursday.

In Canada, the major report of the week is released Wednesday. Statistics Canada is expected to announce the economy grew by 0.5 per cent in July, following a 0.1 per cent rise in June, thanks largely to a rebound in automotive output.

In other corporate news, global manufacturing company Celestica Inc. (TSX: CLS.TO) said it will spend more than US$346 million from its cash reserves to buy back all of its outstanding notes that mature in 2011. The notes pay interest at an annual rate of 7.875 per cent. Its shares rose 52 cents to $9.92.

Canadian Hydro Developers Inc. (TSX: KHD.TO) has announced plans to acquire a 4,000 megawatt offshore wind prospect in Ontario from U.S-based Wasatch Wind Inc. Canadian Hydro says the facility will be the largest offshore operation in the world when complete, supplying enough renewable energy to power over two million homes. Its shares dipped five cents to $5.10.

Viterra Inc. (TSX: VT.TO) says it plans to acquire the assets of Lakeside Fertilizer, a division of XL Foods Inc. and southern Alberta's largest independent retailer of fertilizer and agricultural chemicals. Terms of the deal were not disclosed and its shares rose 41 cents to $10.65.

Overseas, London's FTSE 100 index climbed 1.49 per cent, Frankfurt's DAX rose 2.33 per cent while the Paris CAC 40 was up 1.74 per cent.

Asian markets sank with Tokyo slumping 2.5 per cent on fears that a stronger yen will hurt its key exports sector.

Hong Kong's Hang Seng index declined 2.1 per cent.