Energy shares push TSX lower, BCE tumbles as deal in trouble;NY higher
TORONTO — The Toronto stock market was lower Thursday as losses in the energy sector gained momentum at mid-afternoon with additional pressure from a big slide in BCE Inc. (TSX:BCE) as the proposed takeover of the telecom giant hit serious trouble.
New York markets rebounded modestly Thursday after two sessions of steep declines brought by the surging price of oil while traders took in another helping of dismal housing sector news.
Toronto's S&P/TSX composite index lost 30.71 points to 14,759.66. Worries about the economy and inflation had sent the index down 257 points on Wednesday after it rose above 15,000 points for the first time on Tuesday.
The market was primarily supported by financial stocks.
BCE Inc. (TSX:BCE) was slightly off the lows of the session but at mid-afternoon was down $4.43 or 12 per cent to $32.68 after the Quebec Court of Appeal put the brakes on the proposed $52-billion takeover by a group led by the Ontario Teachers' Pension Plan.
The court found the proposal is not fair to holders of BCE debt, and overturned a lower-court decision that had supported the $42.75-a-share proposal. BCE said it will try to appeal to the Supreme Court of Canada, but its plan to close the deal by the end of June appears in serious doubt.
"The deal could go through," said Paul Harris, chief investment officer BMO Harris Private Banking, "but presumably that would be done at a point less than the original deal at $42.75."
The Canadian dollar moved down 0.17 cent to 101.45 cents US as Statistics Canada released a glum retail sales report for March. Sales edged up 0.1 per cent, well below the 0.4 per cent rise economists had expected.
The TSX Venture Exchange was up 13.56 points to 2,685.32.
New York's Dow Jones industrials moved ahead 31.68 points to 12,632.87, following two days of declines totalling 427 points.
The Nasdaq composite index gained 15.83 points to 2,464.1 while the S&P 500 index added 3.1 to 1,393.81.
The U.S. Office of Federal Housing Enterprise Oversight said Thursday that home prices fell 3.1 per cent in the first quarter compared with last year. The index also fell 1.7 per cent from the fourth quarter of 2007 to the first quarter of 2008, the largest quarterly price drop on record.
Crude oil topped US$135 a barrel overnight as the Wall Street Journal reported that the International Energy Agency is preparing a sharp downward revision of its oil-supply forecast. The July crude contract on the New York Mercantile Exchange eased later in the session, and was down $2.380 to US$130.79 a barrel.
The TSX energy sector lost early gains to move down 1.2 per cent as Canadian Natural Resources (TSX:CNQ) gave back $1.83 to $102.10 while EnCana Corp. (TSX:ECA) gave back $1.01 to $92.60.
"There's got to be some profit taking - there are a lot of doubting Thomases out there including ourselves in terms of the commodity price," added Taylor.
"Is the supply/demand imbalance so dramatically different that you would have this level of price adjustment? And the answer is no."
The financial sector was up 1.6 per cent as mortgage rates started to drift lower.
TD Canada Trust (TSX:TD) is cutting five-year posted rate by 0.34 point to 6.65 per cent, along with significant reductions on other terms, following similar action Wednesday by Laurentian Bank of Canada (TSX:LB). TD shares were up $2.33 to $69.43.
National Bank (TSX:NA) jumped $1.43 to $53.70.
The gold sector moved down 1.45 per cent as the June bullion contract on the Nymex faded $10.30 to US$918.30 an ounce. Kinross Gold Corp. (TSX:K) improved 70 cents to $20.34.
In corporate news, Ford Motor Co. said it is cutting North American production by 15 per cent in the current quarter, then by 15 to 20 per cent in the third quarter and by two to eight per cent in the fourth quarter as high gasoline prices and the weak economy depress sales.
Ford also said it now expects to break even in 2009 - scaling back its goal of returning to profitability next year - and its shares slid 61 cents to US$7.19.
Sherritt International (TSX:S) was ahead 10 cents to $15.28. CEO Jowdat Waheed told shareholders Thursday that the company expects significant growth from its coal assets following its acquisition of Royal Utilities Income Fund, as high oil prices make coal an attractive fuel option.
Cameco Corp. (TSX:CCO) was up 52 cents to $41.04 after the company said it is examining the possibility that uranium, arsenic and fluorides seeped into Lake Ontario from its Port Hope nuclear conversion plant.
Manitoba Telecom Services Inc. (TSX:MBT) announced the dissolution of a partnership with the Canada Pension Plan Investment Board and Blackstone Capital Partners which had been established in March to bid in the upcoming advanced wireless services spectrum auction. Its shares were 88 cents higher to $41.09.
Bombardier Transportation said Swedish state railway SJ AB is adding 20 four-car Bombardier Regina high-speed trains to its fleet, in a contract worth 221 million euros (US$349 million). Shares in Bombardier Inc. (TSX:BBD.B) were off two cents to $7.38.
