TSX up over 100 points, led by energy, financials; N.Y. markets also advance

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market's main index was up more than 100 points late Monday morning, adding to last week's gains as buyers picked up energy and financial companies.

The S&P/TSX composite index moved up 106.7 points to 10,496.5 ahead of a shortened trading week in Canada and the United States.

The TSX energy sector was ahead 1.8 per cent as the August crude contract on the New York Mercantile Exchange moved up $2.14 to US$71.30 even as the International Energy Agency said it is cutting at least three million barrels a day from its oil demand forecasts for the coming five years.

It cited the impact of the recession, combined with signs of a structural shift to less intensive long-term oil use.

EnCana Corp. (TSX: ECA.TO) gained 96 cents to $57.77 and Suncor Inc. (TSX: SU.TO) was up 87 cents to $35.75.

The financial sector was up 1.7 per cent. Scotiabank (TSX: BNS.TO) was ahead $1.06 to $44.06 and Royal Bank (TSX: RY.TO) improved $1.22 to $48.76.

The Canadian dollar moved down 0.11 of a cent to 86.53 cents US.

The TSX Venture Exchange gained 7.49 points to 1,104.07.

The TSX is building on a gain of just under one per cent last week. The market's main index closed Friday about 300 points shy of the 2009 high of 10,714 set on June 11.

But analysts think that the market could get a second wind fairly soon.

"I would think that once we see the second-quarter numbers, it will be 'are those green shoots actually emerging' - and probably they will be because we're going to have an inventory rebuild," said

Gavin Graham, director of investments at BMO Asset Management, said investors will look to see if any of the "green shoots" are emerging and, in his opinion, they probably will be because companies will have to rebuild their inventories.

"Now (investors) know the world isn't coming to an end, you need to rebuild them at least to a level that enables you to fulfill customer demand. And so that's going to give us a really good kicker in the second and third quarter."

However, after that he sees a lacklustre showing on markets as global economies work their way out of a serious recession.

"You've seen the forecasts from the people at the Organization for Economic Development and Cooperation (OECD) and the World Bank, saying we're going to be growing next year and maybe it's going to be one per cent and that's quite frankly a pretty unimpressive rate of growth," added Graham.

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

The Dow Jones industrial average moved ahead 75.3 points to 8,513.7 following a 1.2 per cent drop last week.

The Nasdaq composite index climbed 7.44 points to 1,845.66 while the S&P 500 edged up 6.85 points to 925.75.

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.

The Toronto market's base metals sector was up 0.7 per cent as the price of copper climbed four cents to US$2.33 a pound. Sherritt International (TSX: S.TO) declined six cents to $5.28 and Equinox Minerals (TSX: EQN.TO) was ahead 11 cents to $2.84.

The market also got support from heavyweight Potash Corp. (TSX: POT.TO) up $3.69 to $111.35 despite its announcement at the end of last week that it was cutting its earnings guidance. It cited lower-than-expected sales volumes as customers delay purchases and lower realized prices for phosphate fertilizers.

The August bullion contract on the Nymex slipped $4.10 to US$936.90 an ounce and the gold sector was ahead a slight 0.4 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 $1.16 to $47.96.

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 19 cents to $28.85.

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 1.2 per cent, Frankfurt's DAX and the Paris CAC 40 gained 2.2 per cent.