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TSX lower on Chinese growth warning, SNC Lavalin, Westjet in focus

Proactive Investors
Monday, 5 March 2012

Toronto's main market fell Monday afternoon as China signaled slower growth ahead.

As at 12pm EDT, the S&P/TSX Composite was down 121.61 points, or 0.96% at 12,522.21, while the junior S&P/TSX Venture index was down by 20.68 points, or 1.23%, at 1,658.22.

On the commodities front, crude futures climbed 0.22% to $106.93 a barrel while gold futures were down 0.28% to $1,705 an ounce. Silver futures were off by 1.36% at $34.05 an ounce and base metal copper futures were down 0.96% to $3.86.

Chinese Premier Wen Jiabao set a lower target for China's economic growth, underscoring the need to make the country's breakneck development more sustainable.

The government is aiming for economic growth of 7.5% in 2012, Wen said - lower than the goal for last year of about 8%. The Chinese economy often exceeds the official objective: last year it grew 9.2%.

In Toronto, the global base metals sector slipped 1.4%, while the general metals and mining group fell 1.2% and materials lost 1%.

The only sector in positive territory was real estate, which was marginally higher at 0.1%.

In corporate news, SNC Lavalin (TSE:SNC) acknowledged a motion to bring a lawsuit against it on Monday, denying all claims alleged in the suit.

The motion, which was filed on behalf of anyone who purchased securities of the company between March 13, 2009 and February 28, 2012, seeks approval to bring a class action lawsuit against the company, in connection with "alleged misrepresentations".

Though the suit did not specify, these "misrepresentations" likely stem from the $35 million in undocumented payments that the company booked last year.

WestJet Airlines (TSE:WJA) says slightly fewer passengers filled its seats in February, a key period for vacationing university and college students.

The Calgary-based carrier, which has boosted its capacity since last year, said Monday its load factor dipped to 82.7% for the month, a decline from 83.6% at the same time a year earlier.

First Majestic Silver (TSE:FR)(NYSE:AG) said Monday its fourth quarter earnings rose, as the company produced more silver than it did a year ago, prompting the miner to forecast higher production for 2012.

For the October-to-December fourth quarter, the company posted net earnings of $21.3 million, or $0.20 per share, up 56 percent from $13.7 million, or $0.14 per share, in the same period a year ago.

Adjusted for the unrealized loss on silver futures, earnings rose to $0.24 per share, meeting analysts' estimates, according to Bloomberg Businessweek.

Petrominerales (TSE:PMG) posted a more-than-two-fold rise in quarterly adjusted net income helped by higher production and oil prices.

Enbridge (TSE:ENB)(NYSE:ENB) reported Sunday that a key segment of the company's oil pipeline system in the US Midwest will remain shut down for up to four more days after a deadly vehicle accident in Illinois caused an oil leak and fire, likely squeezing supplies for refiners in the region.

On the economic front, sales of existing homes in Canada are projected to increase slightly this year, but dip in 2013, the Canadian Real Estate Association said.

Sales are predicted to rise 0.3 percent in 2012 to 458,800 nationally, up from 457,305 in 2011, said CREA.

The modest increase is attributed to rising demand in Alberta, Saskatchewan and Nova Scotia which is expected to offset declines in British Columbia, Ontario and New Brunswick.

US/Europe

US markets followed global markets lower following news of China lowering its annual growth target.

At midday, the Dow Jones industrial average lost 75 points, or 0.6%, the S&P 500 slipped 9 points, or 0.7% and the NASDAQ declined 28 points, or 0.9%.

In corporate news, BP (NYSE:BP)(LON:BP) reached a settlement with businesses and individuals over the Gulf oil spill. Its $7.8 billion dollar settlement was lower than many had expected.

AIG (NYSE:AIG) is selling part of its stake in AIA Group, hoping to raise about $6 billion to pay down its US government bailout balance.

Apple (NASDAQ:AAPL) says the number of downloads from its App Store has now reached 25 billion. It is giving away a $10,000 gift certificate to the customer who downloaded the 25 billionth app.

On the economic front, the U.S. non-manufacturing sector expanded at a faster pace in February, according to data released by the Institute for Supply Management.

The ISM's non-manufacturing purchasing managers' index came in at 57.3 for last month, up from 56.8 in January.

Forecasters surveyed by Dow Jones Newswires had expected the February PMI to slow to 56.0. Readings above 50 indicate activity is expanding. The non- manufacturing index has been in expansion territory for more than two years.

New orders for factory goods dropped in January by the most in over a year and businesses cut orders for new capital goods, suggesting one of the drivers of the economic recovery faltered at the start of the year.

The Commerce Department said on Monday orders for manufactured goods fell 1%, a less steep decline than the 1.5% loss expected by private forecasters in a Reuters poll. Still, it was the biggest decline since October 2010.

Many economists think the expiration of some tax breaks on capital spending at the end of 2011 led businesses to bring forward investments.

Indeed, December's gain was revised up to 1.4% from a previously reported 1.1%.

In Europe, stocks closed lower with the UK's FTSE 100 losing 0.6%, the DAX dropping 0.9% and the CAC 40 shedding 0.3%.
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Source: Newsy.com - on March 7, 2012

News video: China Lowers Growth Expectations for 2012

China Lowers Growth Expectations for 2012

Chinese Premier Wen Jiabao announced this week that China will lower its economic growth target from 8 percent to 7.5 percent.

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