Energy, financial stocks send TSX higher; N.Y. mainly up ahead of economic data

By Malcolm Morrison, The Canadian Press

TORONTO - A strong showing by energy and bank stocks helped send the Toronto stock market sharply higher Monday morning.

The S&P/TSX composite index moved up 104.2 points to 10,494 ahead of a shortened trading week in Canada and the United States.

The TSX energy sector was ahead 1.45 per cent as the August crude contract on the New York Mercantile Exchange moved up $1.60 to US$70.76 even as the International Energy Agency said oil demand is set to drop for a second-straight year. It is the first time oil demand has fallen for two consecutive years since 1982-1983.

The IEA is cutting at least three million barrels a day from its oil demand forecasts for the coming five years. It cited the recessionary impact, combined with signs of a structural shift to less intensive long-term oil use.

EnCana Corp. (TSX: ECA.TO) gained 61 cents to $57.42 and Suncor Inc. (TSX: SU.TO) was up 84 cents to $35.71.

The financial sector was up 1.6 per cent. Scotiabank (TSX: BNS.TO) was ahead $1.07 to $44.07 and Royal Bank (TSX: RY.TO) improved $1.32 to $48.86.

The Canadian dollar reversed direction to move down 0.32 of a cent to 86.32 cents US.

The TSX Venture Exchange gained 6.16 points to 1,105.4.

The TSX is building on a gain of just under one per cent last week. But the spring rally's gains have been harder to come by since the market hit a new high in the 10,714 range on June 11, about 300 points shy of where the main index settled on Friday.

Since then, as the second quarter comes to a close, investors are at a crossroads. After running up the market more than 35 per cent in three months, investors have become more skeptical of the economy's recovery in recent weeks amid a mixed bag of data.

New York markets were mainly higher after both the Dow industrials and the S&P 500 lost ground last week.

The Dow Jones industrial average moved ahead 34.6 points to 8,473 following a 1.2 per cent drop last week.

The Nasdaq composite index dipped 1.78 points to 1,836.44 while the S&P 500 edged up three points to 921.9.

Analysts say the market will likely be rocky again this week, as investment managers try to push stocks higher to boost their returns ahead of the end of the April-June period on Tuesday.

"We still have money flows coming into the market for window dressing," said Don Schreiber Jr., CEO of WBI Investments, a Little Silver, N.J.-based investment adviser.

There was little by way of economic or corporate news scheduled for Monday.

However this week, which is shortened by Canada Day on Wednesday and by the Independence Day holiday on Friday, brings key data that will give investors a better sense of where the economy is headed.

Statistics Canada will release April gross domestic product figures on Tuesday. Economists expect to see a contraction of 0.1 per cent on the month, following a 0.3 per cent dip in March.

And on Thursday, the U.S. government releases its June employment report. Investors are braced for the American economy to shed 365,000 jobs during the month.

Investors will also get readings on consumer confidence and manufacturing this week.

The Toronto market's base metals sector was up 1.4 per cent as the price of copper climbed four cents to US$2.33 a pound. Ivanhoe Mines (TSX: IVN.TO) gained 18 cents to $6.81 and Equinox Minerals (TSX: EQN.TO) was ahead eight cents to $2.81.

The August bullion contract on the Nymex slipped $4.10 to US$936.90 an ounce and the gold sector was ahead a slight 0.5 per cent.

In corporate news, the chief executive of Agrium Inc. (TSX: AGU.TO) says CF Industries Holdings Inc. is still resisting takeover efforts from the Calgary-based fertilizer giant. Mike Wilson says CF's chairman indicated he was not willing to meet to discuss the nearly US$4 billion deal.

He says CF is disregarding the wishes of its shareholders, 62 per cent of whom had tendered their stock to Agrium's offer as of last week and Agrium is still pursuing its hostile bid for the American fertiliser company, which expires on July 22. Agrium shares were ahead 70 cents to $47.50.

Coffee giant Tim Hortons Inc. (TSX: THI.TO) is returning its home base to Canada with a plan to reorganize and convert to a Canadian-based corporation.

The popular coffee house chain is currently owned by an American parent company after its spinoff from U.S.-based burger giant Wendy's in 2007.

Tim Hortons says the reorganization will save money due to Canada's lower tax rates and make international expansion easier and its shares added 12 cents to $28.78.

Major Asian markets drifted lower as Tokyo's Nikkei 225 index slid 93.92 points, or one per cent, to 9,783.47, while Hong Kong's Hang Seng index declined 71.75 points, or 0.4 per cent, to 18,528.51.

London's FTSE 100 rose 0.63 per cent, Frankfurt's DAX gained 0.9 per cent while the Paris CAC 40 was up 1.90 per cent with investors pleased by data showing that European business and consumer confidence rose for a third straight month. Still, the European Commission took a cautious stance, saying the economic rebound in Europe is relatively subdued.