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TSX declines as commodities drop, Spain worries increase, Couche-Tard rallies

Proactive Investors
Wednesday, 18 April 2012

Toronto's main market fell Wednesday as commodities took back some of yesterday's gains with investor worries focused on Europe.

As of around 1:00pm ET, the main S&P/TSX Composite Index lost 33.36 points, or 0.27%, to 12,103.58, while the more junior S&P/TSX Venture Composite fell 8.43 points, or 0.59%, to 1,413.87.

In Toronto, info tech, materials and energy were the biggest weights on the market. Financials were up, while healthcare saw strong gains on the back of a large acquisition in the sector.

Gold for June delivery dropped $9.6 to $1,641.50 an ounce, while crude oil for May shed $1.7 to $102.49 a barrel.

Silver futures lost more than 25 cents to $31.42 an ounce and the base metal copper contract edged down over 1 cent to $3.64 a pound.

Energy was down as Suncor Energy (TSE:SU) and Canadian Natural Resources (TSE:CNQ) fell 0.8% and 1.75%, respectively.

In materials, Eastern Platinum (TSE:ELR) lost more than 4%, while Teck Resources (TSE:TCK.B) rose 1% and Lundin Mining (TSE:LUN) dropped 2.9%.

Gold companies were in the red, with Barrick Gold (TSE:ABX), Kinross Gold (TSE:K) and Goldcorp (TSE:G) down 0.71%, 2.5% and over 2%, respectively.

Financials edged up as Royal Bank of Canada (TSE:RY) and Bank of Nova Scotia (TSE:BNS) rose 0.33% and 0.53%, respectively, while insurer Manulife Financial (TSE:MFC) lost 1.7%.

In Canadian corporate news, Alimentation Couche-Tard (TSE:ATD.B) announced Wednesday that it has made an offer to buy Scandinavia’s top convenience and fuel retailer for US$2.8 billion, giving the North American company a large European presence.

Under the terms, Quebec-based Couche-Tard would acquire all of the issued and outstanding shares of Norwegian Statoil Fuel & Retail ASA, a convenience and fuel retailer, for NOK53 or roughly $9 per share.
Couche-Tard's shares rallied more than 13% on the news.

Ivanhoe Mines (TSE:IVN)(NYSE:IVN) Wednesday signed an agreement with majority shareholder Rio Tinto (NYSE:RIO)(LON:RIO) to ensure funding of the $6 billion Oyu Tolgoi copper and gold mine in Mongolia.

Rio will provide an immediate additional credit facility up to $1.5 billion to ensure construction isn’t delayed. Rio will also support the completion of a loan of $3 to $4 billion to be provided by third-party lenders.

Ivanhoe, whose shares rose over 9%, plans a $1.8 billion share sale to repay the loan and an existing facility.

Pharmacy benefit manager SXC Health Solutions Corp. (TSE:SXC) (NASDAQ:SXCI) said Wednesday that it will buy peer Catalyst Health Solutions (NASDAQ:CHSI) in a cash and stock deal valued at around $4.4 billion.

Research In Motion (RIM) (NASDAQ:RIMM)(TSE:RIM) introduced Wednesday a new lower-end BlackBerry 7 smartphone for customers in India - a move it hopes will help the Waterloo-based company boost its balance sheet until the anticipated launch of the BlackBerry 10 platform.

Supermarket chain Metro (TSE:MRU) reported fiscal second-quarter profit and revenue increased, which prompted the company to raise its quarterly dividend. Net earnings jumped 12.1 percent to $96.1 million, or 94 cents per diluted share, compared to a year-earlier profit of $85.7 million, or 82 cents per diluted share.

Revenue grew 3.7 percent to $2.65 billion for the 12-weeks that ended March 10.

Yukon-Nevada Gold Corp. (TSE:YNG) said Wednesday that it has started a strategic review process in an effort to bolster shareholder value, which could lead to the possible sale of the company.

Gabriel Resources (TSE:GBU) saw its shares rise by around 5% after it said that a decision today of the Cluj Tribunal in Romania reaffirmed the validity of the Urbanism Certificate, thus ruling in favour of Gabriel's 80.69 percent-owned Romanian subsidiary, Rosia Montana Gold Corp.

In its ruling, the Tribunal rejected an action filed by two non-governmental organizations requesting the cancellation of certificate issued for the Rosia Montana project.

*US/Europe*

US equities also fell Wednesday, as new reasons arose for investors to fret over the European economy, and corporate earnings also took their toll. The Dow was lately down 0.52%, while the other two main US indices showed more modest losses.

On Wednesday, Spain released that showed its banks saw a sharp rise in the number of bad loans. The Bank of Spain said the ratio of bad loans for the sector hit a 17-year high in February of 8.2%.

A sale of 12 and 18-month debt on Tuesday was successful in drawing demand, but an auction Thursday of longer-term paper is what analysts will be focused on.

Meanwhile, data released Wednesday showed that Italy’s economy is slowing down more than previously expected.

On Wednesday, German two-year debt sold at a record-low yield, with investors fleeing to the perceived safety of Europe's largest economy amid problems elsewhere in the region.

The yield on the German two-year note sat at 0.14% early Wednesday.

In US corporate earnings, Intel (NASDAQ:INTC) said late Tuesday that first-quarter earnings fell 13 percent as spending on research and marketing rose while revenue was flat, the world's largest chipmaker said.

Adjusted profit was 56 cents per share. Analysts were expecting earnings of 50 cents per share on revenue of $12.85 billion.

Technology services company IBM (NYSE:IBM) late Tuesday posted a first-quarter profit that rose more than 7 percent from a year earlier, as it saw increases in key services and software businesses.

For the first quarter, IBM reported a profit of $3.07 billion, or $2.61 per share, up from $2.86 billion, or $2.31 per share, a year earlier. Revenue gained by 0.3 percent to $24.67 billion, or up 1 percent including currency fluctuations. Analysts recently projected earnings of $2.65 a share on revenue of $24.78 billion.

Still, shares of both IBM and Intel were down Wednesday.

Oilfield services company Halliburton (NYSE:HAL) reported Wednesday first-quarter profit grew 22 percent amid revenue growth, which pushed its stock price up.

Video game publisher THQ (NASDAQ:THQ) said it expects fiscal fourth-quarter earnings to come in above Street expectations on better-than-expected digital sales and strong sales of its "Saints Row: The Third" and "UFC Undisputed 3" titles.

PNC Financial Services Group (NYSE:PNC) said Wednesday that first-quarter profit fell 3.8 percent as the lender incurred higher non-interest expenses which overshadowed a decline in credit loss provisions.

Bank of New York Mellon (BNY Mellon)(NYSE:BK) said Wednesday that first-quarter profit declined slightly as its foreign exchange revenue slid 21 percent from a year earlier.

The world's largest custody bank posted net income of $619 million, or 52 cents per share, compared with $625 million, or 50 cents per share, a year earlier. That matched the average estimates of analysts.

Yahoo (NASDAQ:YHOO) surprised the market with a 28% jump in first-quarter earnings late Tuesday as the company’s new CEO Scott Thompson said the troubled Internet company would focus on its core businesses.

BlackRock (NYSE:BLK), the world's largest asset manager, said first-quarter profits were steady, bolstered by strong inflows into its iShares exchange traded fund (ETF) business.

Excluding items, the asset manager earned $3.16 per share. Analysts on average had expected $3.04 per share, according to Thomson Reuters.

Shares of Berkshire Hathaway (NYSE:BRK.B) declined 1.2% after chairman Warren Buffett said yesterday he was diagnosed with stage-1 prostate cancer.

Textron (NYSE:TXT) reported Wednesday better-than-expected first-quarter results on demand for the manufacturer’s aircraft and helicopters, but shares still fell more than 3%.

First Republic Bank (NYSE:FRC) beat on revenue expectations, while earnings were in line with estimates, with the company initiating a quarterly dividend of 10 cents a share.

After the closing bell, investors will get the latest quarterly numbers from American Express (NYSE:AXP), eBay (NASDAQ:EBAY) and YUM! Brands (NYSE:YUM).

On the economic front, a report showed that crude inventories rose slightly more than economists expected.

European markets finished broadly lower today on the news from Spanish banks. The CAC 40 was down 1.59% while Germany's DAX was off 1.01% and Britain's FTSE 100 fell lower by 0.38%.
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Source: Agence France-Presse - on April 20, 2012

News video: Lagarde, Zoellick on the global economy

Lagarde, Zoellick on the global economy

IMF head Christine Lagarde says "collective action" is needed to boost economic recovery as worries mount that Spain might be the next eurozone country to seek a rescue. Duration: 01:00

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