CANADA STOCKS-TSX edges higher; Progress deal boosts energy shrs

Thu Jun 28, 2012 5:10pm EDT
 
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* TSX closes up 13.76 points, or 0.12 pct, at 11,424.70
    * Progress takeover bid boosts natural gas plays
    * Gold miners, financial issues drag on market

    By Allison Martell
    TORONTO, June 28 (Reuters) - Canada's main stock index rose
on Thursday as a takeover offer for Progress Energy Resources
Corp boosted its stock and other natural gas plays in
the heavyweight energy group.
    Energy issues rose 2 percent after Malaysia's state oil
company launched a friendly bid to buy Progress at a 77 percent
premium to its Wednesday close.
    The stock closed up 73.6 percent at C$20.05 and played the
biggest role of any single company in leading the market higher.
 
    "It's obvious that this is where a lot of strength is coming
from," said Fred Ketchen, director of equity trading at
ScotiaMcLeod. "People will say, if someone can come out and make
a takeover bid for (Progress), well maybe Encana becomes a
takeover target somewhere along the way."
    Encana Corp, Canada's largest natural gas producer
and one of Progress's rivals, jumped on news of the deal, and
closed up 6.7 percent at C$21.08. Encana was the most
influential gainer in Toronto after Progress. 
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 13.76 points, or 0.12 percent, at 11,424.70.
    
    CENTERRA, TAHOE SINK
    The heavyweight materials group, which includes gold miners,
and financial stocks were the two major drags on the index.
Financial issues fell 0.4 percent, while materials stocks fell
1.5 percent.        
    The price of gold fell more than 1 percent, hit by worries
of an economic slowdown after a U.S. Supreme Court ruling upheld
a landmark healthcare law and by fading hopes that a European
Union summit will resolve that region's debt crisis. 
 
    "The largest influence on the negative side continues to be
the mess that is taking place within Europe," said Ketchen.
    European finance officials worked on urgent measures on
Thursday to bring down the borrowing costs of Spain and Italy,
seen as too big to bail out, with EU leaders deeply divided over
a solution to the euro zone's ever widening debt crisis.
 
    Shares of Tahoe Resources Inc  fell on news
Guatemalan President Otto Perez Molina is floating a proposal to
change the constitution to allow the government to take up to a
40 percent stake in new mining projects in the country. Tahoe
said the proposed reforms would not affect its Escobal silver
asset, but the stock closed down 22.7 percent at
C$12.50. 
    Tahoe is 40 percent owned by Goldcorp Inc, which
itself also owns the Marlin gold mine in Guatemala. Goldcorp
fell 2.8 percent to C$37.31 and was the biggest single drag on
the broader market.
    Also in the materials group, Centerra Gold Inc fell
32 percent to C$6.72 after the Canadian miner said a
Kyrgyzstan-based independent member of its board had stepped
down. The news came one day after Kyrgyz lawmakers moved to
review Centerra's mining contract for its Kumtor gold mine.
 
    
    SURVEYS POINT TO TSX GAINS
    The fears about Europe and other negative news overshadowed
surveys suggesting a more bullish long-term outlook for Toronto
stocks.
    A Reuters poll showed that Canadian share prices are
expected to end 2012 slightly stronger, gaining in the next 12
months to erase year-to-date losses caused by the euro zone debt
crisis.  
    Separately, a survey by Russell Investments Canada found
that with worries about the European crisis pushing down
valuations, Canadian investment managers are increasingly
positive about Canadian equities. It found that 70 percent of
managers were bullish on the sector, compared with only 56
percent in the first quarter.