BCE, firm oil price set to buoy Toronto stocks

Tue Jun 3, 2008 9:07am EDT
 
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TORONTO, June 3 (Reuters) - Toronto's main stock market index was seen opening higher on Tuesday fueled by rising oil prices and a positive court ruling for blue chip company BCE Inc (BCE.TO: Quote).

However, news earlier on Tuesday that General Motor Corp(GM.N: Quote) plans to close four plants including one in Canada, and a report that U.S. brokerage Lehman Brothers LEH.N might have to raise additional capital, could limit enthusiasm.

The Supreme Court of Canada agreed on Monday to hear an appeal by BCE Inc. (BCE.TO: Quote)BCE.N in two weeks' time of a lower court decision that threatens to derail its C$34.8 billion ($34.8 billion) buyout.

The parent of Bell Canada will now be allowed to contest the lower court decision, which said BCE did not take the interest of its bondholders into account when it backed what would be the world's largest leveraged buyout.

The company's shares jumped almost 3 percent in after-hours activity in New York on Monday following the decision.

"We should get a bounce from BCE with the Supreme Court's agreement to hear the appeal that should help," said Gavin Graham, chief investment officer at Guardian Group of Funds. "Another thing is oil prices ticking up a little bit."

U.S. crude oil remained firm above $127 a barrel after touching $127.89 earlier in the day.

Gold companies could also provide a lift as the price for the precious metal firmed as the U.S. dollar weakened on worries over the health of the U.S. economy.

But the grim news from GM, coupled with the Lehman report, could be interpreted as pointing to a crumbling U.S. economy, Graham said.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE begins the day at 14,814.18 after climbing almost 100 points in the previous session.

In individual company news, Biovail Corp BVF.TO could see activity after founder and former CEO Eugene Melnyk proposed his own slate of directors for the Canadian drugmaker. ($1=$1.00 Canadian) (Reporting by Scott Anderson; Editing by Bernadette Baum)