Stocks weak, investors look for reassurance about European debt crisis

The Canadian Press ~ The News
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TORONTO - The Toronto stock market moved slightly higher Wednesday afternoon with investors expecting the European Union to deal with a debt crisis enveloping some of its member countries.
The S&P/TSX composite index moved was five points higher to 11,279.2, while the Canadian dollar moved ahead 0.42 of a cent to 94.06 cents US. The TSX Venture Exchange was down 2.13 points to 1,472.4.
Gains were led by financial stocks on the belief that the European Union would move to help Greece with its mounting debt problem. But there were also mixed signals about the outcome of a Thursday meeting between EU leaders and European Central Bank president Jean-Claude Trichet.
"Our view is that there will be a solution, or at least indications that they're closer to a solution that will be EU led, as opposed to specific to Germany or specific to any one particular country - but it is going to weigh on the markets until it comes about," said Philip Petursson, director of institutional equities at MFC Global Investment Management.
But German officials said Wednesday there was no urgent need for a bailout at the moment and that "no decision on such help" is imminent. They also said EU rules prohibited them from guaranteeing another country's debts.
Markets have dropped in recent weeks over concerns that debt problems in countries like Greece, Spain and Portugal would spread and endanger a global economic recovery.
"Spain is, I think, actually the biggest concern because it represents such a large portion of the EU economy - it's about seven or eight per cent of the EU as far as GDP is concerned," Petursson said.
He added that the EU needs to come up with a collective solution and not just one that deals with the immediate problem posed by Greece.
On the TSX, the financials sector gained just over one per cent. Manulife Financial (TSX:MFC) gained 21 cents to $19.45 while Royal Bank (TSX:RY) was ahead 98 cents to $54.79.
Industrial stocks were up 0.84 per cent as transport giant Bombardier Inc. (TSX:BBD.B) rose seven cents to $5.44.
The energy sector led decliners even as oil prices advanced despite a report showing unexpected growth in U.S. crude inventories. The American Petroleum Institute said U.S. crude stocks jumped 7.2 million barrels last week. Analysts had expected an increase of two million barrels.
The March crude contract on the Nymex shook off early declines to move ahead 96 cents to US$74.71 a barrel but the energy sector slipped 0.74 per cent. Suncor Energy (TSX:SU) was down 40 cents to C$31.45.
Talisman Energy Inc. (TSX:TLM) shares declined 53 cents to $17.47 after the company said it had a $111-million net loss in the fourth quarter, a stark contrast to the $1.2-billion net profit in the final quarter of 2008. Revenue rose to $1.82 billion from $1.77 billion in the year-ago quarter.
The gold sector was down 0.73 per cent as the April bullion contract on the New York Mercantile Exchange fell $2.20 to US$1,075 an ounce. Barrick Gold Corp. (TSX:ABX) fell 31 cents to C$38.04.
March copper was unchanged at US$2.99 a pound and the base metals sector lost 0.34 per cent. Inmet Mining (TSX:IMN) was down $1.14 to C$55.86.
New York markets were also pressured by comments from Ben Bernanke as the Federal Reserve's chairman laid out plans about how the central bank plans to unwind stimulus measures without sending the U.S. back into recession.
The Dow Jones industrials dipped 3.1 points to 10,055.5.
The Nasdaq composite index drifted 0.8 of a point higher to 2,151.67 while the S&P 500 index gained 1.2 points to 1,071.7.
In prepared remarks to a House committee, Bernanke said the Fed will likely start tightening credit by boosting the interest rate it pays banks on money they leave at the central bank. Consumers and companies would then have to pay more to borrow.
Bernanke also indicated the Fed is still months away from raising interest rates or draining most of the stimulus money it injected to aid the financial system.
In economic news, Canada's trade deficit with the rest of the world widened slightly in December.
Exports rose 1.7 per cent and imports increased 1.8 per cent, adding up to a deficit of $246 million in December, up from $201 million in November.
And the U.S. Commerce Department said that the U.S. trade deficit surged to a larger-than-expected US$40.18 billion in December. The deficit was 10.4 per cent higher than the November imbalance and much larger than the US$36-billion deficit that economists had expected.
In other corporate news, the operator of Canada's largest securities markets, TMX Group Inc. (TSX:X), said it had a $26.8-million net loss in the fourth quarter. TMX shares rose 86 cents to $29.37.
Air Canada (TSX:AC.B) is reporting that it had a $56-million net loss in the fourth quarter, a dramatic improvement from the net loss of $727 million racked up in the same period of 2008. Much of that loss was due to foreign exchange losses. Air Canada's operating revenues dropped by $150 million to $2.35 billion, but its shares gained five cents to $1.37.
MDS Inc. (TSX: MDS) said it has agreed to sell some of its last remaining non-core businesses but that a Montreal unit would be closed and 225 jobs in that city cut. The Canadian life sciences company will get $45 million in cash and notes for selling parts of its MDS Pharma Services early stage business. MDS shares were down two cents to $8.42.
Anglo-Australian miner BHP Billiton Ltd. on Wednesday announced it had more than doubled its first-half profit to US$6.1 billion after selling record quantities of key commodities.

Organizations: TSX, European Union, S&P European Central Bank MFC Global Investment Management Federal Reserve Manulife Financial Bombardier Inc. American Petroleum Institute Nymex MDS Inc. Suncor Energy Talisman Energy Inc. New York Mercantile Exchange Barrick Gold Air Canada Inmet Mining Dow Jones House committee U.S. Commerce Department TMX Group MDS Pharma Services BHP Billiton

Geographic location: U.S., Greece, TORONTO Spain Germany Portugal Canada New York Montreal

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