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TSX dips as materials weigh, US retail sales beat, but manufacturing index drops

Proactive Investors
Monday, 16 April 2012

Toronto's main market edged down Monday afternoon as investors considered better than expected US retail sales in March, alongside corporate earnings, lower commodities and increasing anxiety over the situation in Europe.

As of after 1:00pm ET, the S&P/TSX Composite was down 5.63 points, or 0.05%, to 12,034.76, while the more junior S&P/TSX Venture Composite fell 22.47 points, or 1.54%, to 1,437.46.

In Toronto, metals and mining, materials, utilities, and energy were all in the red, while financials rose by around 0.6%.

Mining stocks weighed on the resource-heavy index, as commodities dropped. Gold for June delivery lost 0.57% to $1,650.70 an ounce, while crude oil for may edged down three cents to $102.8 a barrel.

The base metal copper contract fell 0.04% to $3.63 a pound while silver futures retreated 0.13% to $31.35 an ounce.

Among materials, Silver Wheaton (TSE:SLW), Iamgold (TSE:IMG) and  First Quantum (TSE:FM) declined 5.5%, 3%, and 4.4%, respectively. Kinross Gold (TSE:K) fell a more modest 1.1%.

In the energy sector, Suncor Energy (TSE:SU) was up around 0.7%, while Crew Energy (TSE:CR) dropped over 5%.

Financials were lifted as Bank of Nova Scotia (TSE:BNS), CIBC (TSE:CM) and insurer Manulife Financial (TSE:MFC) gained 0.55%, 0.75% and 0.22%, respectively.

In Canadian corporate news, energy company Nexen (TSE:NXY) saw shares advance over 1% after it said it received regulatory approvals for an expansion at its oil sands operation in northern Alberta. The latest approvals are for two more extraction pads at the Long Lake operation, which has in the past experienced delays.

SouthGobi Resources (TSE:SGQ) said Monday that the Mongolian government has suspended exploration and mining licenses for its Ovoot Tolgoi coal mine following a buyout bid by Chinese aluminum giant Chalco.

The Canadian coal miner said it has not received any official notification. However, if it receives one, it may need to suspend operations until an injunction is granted, the company said. The suspension would be initiated to allow the government to review the proposed change of ownership, the company said in a statement.

CAE (NYSE:CAE) (TSE:CAE) announced Monday that it has signed an agreement with the Brunei Ministry of Finance to establish a joint venture company to develop a multi-purpose training centre (MPTC) in Brunei Darussalam, in a deal valued at about C$170 million in training contracts.

The company also said Monday that for the year that ended March 31, 2012, it finished with more than C$950 million of military orders, including a record order intake coming from the United States.

On the economic front, Statistics Canada reported that foreigners added $12.5 billion to their holdings during February, concentrated in federal government bonds. Canadian investors reduced their holdings of foreign securities by $2.2 billion.

The Canadian Real Estate Association also said that sales activity rose 2.5% from February to March, to its highest monthly level since April 2010.

*US/Europe *

US equities were mixed Monday, as blue chips hung onto gains, while the tech sector lagged. The Dow was lately up 0.78%, while Nasdaq was down 0.62% and the S&P 500 edged up 0.12%.

Stocks opened higher after the U.S. government said retail sales rose 0.8% in March, beating analyst expectations of 0.3%.

An index of manufacturing activity in New York State, however, fell in April to 6.6, much lower than expected, from 20.2 in March, according to the New York Federal Reserve bank.

Meanwhile, Citigroup (NYSE:C) shares were up after the bank reported a decline in first quarter profit, but still beat analyst expectations when factoring in certain accounting adjustments.

For the three months that ended March 31, Citigroup earned $2.93 billion, or 95 cents per share in the first quarter, including $1.3 billion of negative impact for credit value adjustments and related costs, as well as a $477 million gain from minority investments.

Excluding items, the company said it earned $1.11 per share, up 7 percent from a year ago.

Revenue during the quarter, including special items, was $19.4 billion. Excluding the items, revenue was up 1 percent from a year earlier, to $20.2 billion.

Analysts polled by FactSet Research had expected the bank to report earnings of $1.01 per share, on revenue of $19.93 billion in the quarter.

Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) will report earnings later in the week.

Gannett (NYSE:GCI) shares were down more than 9% after the newspaper publisher said first quarter earnings of 28 cents per share dropped 24% from the same period last year.

Broker Charles Schwab Corp. (NASDAQ:SCHW) Monday posted a 20 percent drop in first-quarter earnings as fees fell and compensation expenses rose, but the results met analyst expectations.

This week, earnings reports from 84 of the companies in the S&P 500, and 12 of the 30 companies in the Dow Jones Industrial average are on tap.

Shares of Baxter (NYSE:BAX) also dropped Monday after the company said the FDA requested additional information to complete a review of a drug being developed by the company with Halozyme Therapeutics (NASDAQ:HALO).

In more economic news, U.S. business inventories rose 0.6% in February, following a 0.7% increase in January, according to the Commerce Department.

And in Europe, bond yields rose above 6% earlier today - the highest level in months - reigniting investor worries.

European markets finished higher today with shares in Germany leading the region. The DAX was up 0.63% while France's CAC 40 rose 0.51% and Britain's FTSE 100 was higher by 0.26%.
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