June 14, 2012 / 12:38 PM / 5 years ago

CANADA STOCKS-TSX may drop as euro zone borrowing costs rise

Jun 14 (Reuters) - Canada’s main stock index looked set to open lower on Thursday as a three-notch downgrade on the Spanish debt ahead of Greek elections this weekend and rising Italian and Spanish borrowing costs weighed on sentiment in equity markets.

TOP STORIES

* Chancellor Angela Merkel rebuffed pressure for Germany, Europe’s most powerful economy, to underwrite debt or guarantee bank deposits in the euro zone as Spain’s soaring borrowing costs raised new alarm.

* Italy’s three-year borrowing costs spiked to 5.3 percent at an auction on Thursday, underlining the mounting pressures on the euro zone’s third-largest economy after a Spanish aid deal failed to convince investors the bloc’s crisis can be contained.

* Credit ratings agency Moody’s Investors Service cut its rating on Spanish government debt on Wednesday by three notches to Baa3 from A3, saying the newly approved euro zone plan to help Spain’s banks will increase the country’s debt burden.

* Canadian travel operator Transat AT Inc posted a second-quarter loss, hurt by higher fuel costs and lower prices for holiday packages.

* Nokia plans to cut one in five jobs at its global cellphone business as it loses market share to rivals Apple and Samsung and burns through cash, raising new fears over its future.

MARKET SNAPSHOT

* Canada stock futures traded down 0.09 percent

* U.S. stock futures , , were mixed in the range of -0.1 percent to 0.14 percent

* European shares, were down

COMMODITY PRICE MOVES

* Thomson Reuters-Jeffries CRB Index : 269.16; was down 0.05 percent

* Gold Futures : $1620; rose 0.12 percent

* US Crude : $82.55; fell 0.08 percent

* Brent Crude : $96.44; fell 0.71 percent

* LME 3-month Copper : $7376.25; fell -0.19 percent

CANADIAN STOCKS TO WATCH

* CAE Inc. : The aviation trainer said it sold four flight simulators to Aviation Industry Corp of China, Singapore Airlines and two other companies for C$65 million. CAE said it was awarded a series of military contracts valued at more than C$110 million.

* Evertz Technologies Ltd. : The broadcast equipment maker reported a 9 percent rise in quarterly profit on higher international sales. Its fourth-quarter earnings rose to 18 Canadian cents per share from 16 Canadian cents per share, a year earlier. Revenue rose 11 percent to C$76.3 million, while international region revenue rose 42 percent to C$39.6 million.

ANALYST RECOMMENDATIONS

Following is a summary of research actions on Canadian companies reported by Reuters.

* Allied Nevada Gold : RBC cuts price target to C$50 from C$51 on valuation; rating outperform

* Bauer Performance : CIBC ups target to C$11 from C$10 to reflect acquisition of Cascade, rating sector outperformer

* Dollarama : CIBC raises price target to C$69 from C$59 and Barclays raises price target to C$65 from C$55 after stronger-than-expected quarterly results

* Duluth Metals : NBF cuts target to C$3.75 from C$4.95 on industry headwinds and timing considerations for the development of Maturi and Birch Lake; rating outperform

* Lake Shore Gold : NBF cuts price target to C$2.90 from C$3 on delay in mill expansion

ON THE CALENDAR

* Major Canadian economic data includes Industrial capacity utilization and home prices

* Major U.S. events and data includes current account balance, consumer prices, real earnings and initial jobless claims

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