April 5, 2011 / 12:46 PM / 6 years ago

CANADA STOCKS-TSX may open lower after China rate hike

4 Min Read

April 5 (Reuters) - Toronto's resource-heavy main stock index looked set to open lower on Tuesday after China raised interest rates for the second time this year, knocking commodity prices lower.

Factors to Watch

* Canadian equity futures <0#SXF:> pointed to a lower open.

* China's central bank increased interest rates on Tuesday for the fourth time since October, raising suspicions that data next week may show inflation rose more than expected in March. [ID:nL3E7F51LX]

* U.S. stock index futures fell after a slide in Apple Inc, which had its weighting cut in a rebalancing of shares in the Nasdaq 100, forcing some to sell the iPhone maker's stock. [.N]

* European shares traded flat in choppy trade with inflation concerns intensifying as crude prices hovered around 2-year highs, prompting investors to pause for breath following a three-week rally. [.EU]

* Asian shares were down as investors worried rising commodities prices could erode corporate profit margins.

Canadian Stocks to Watch

* TMX Group Inc. (X.TO): The owner of the Toronto Stock Exchange will put forward a formal submission to Canadian regulators in the "coming weeks" regarding its proposed takeover by London Stock Exchange, TMX CEO Tom Kloet said on Monday. [ID:nN04266784]

* Equinox EQN.TO: The company extended its $4.8 billion bid for Lundin Mining (LUN.TO) and postponed a vote on the deal by two weeks on Tuesday, awaiting a formal $6.5 billion takeover offer from China's Minmetals Resources. [ID:nSGE73400P]

* Kinross Gold Corp. (K.TO): The gold miner said it signed an agreement to buy the stake it does not already own in Chukotka Mining and Geological Co for about $350 million, giving it full ownership of the Russian mining company. [ID:nL3E7F42ZS]

Analyst Recommendations

Following is a summary of research actions on Canadian companies reported by Reuters. [RCH/CA]

* Cineplex Inc (CGX.TO) rating raised to outperform from sector perform at National Bank

* Thomson Reuters Corp (TRI.TO) price target cut to C$45 from C$47; rating outperform at National Bank

Commodity Price Moves

* The Thomson Reuters-Jefferies CRB index .CRB, a global commodities benchmark, fell 0.41 percent in early trade.

* Oil prices fell but held near 2-year highs, with Brent remaining close to $121 a barrel on unrest in oil exporting countries in the Middle East and Africa. U.S. oil CLc1 is expected to fall to $106.41, as it faces a strong resistance at $109.11. A Fibonacci projection of the current wave 3 target reveals the 61.8 percent at $109.11 per barrel, which has forced oil to retrace. [O/R]

* Gold prices eased after China raised interest rates for the second time this year, though euro zone debt concerns and elevated oil prices linked to violence in the Middle East region limited losses in the metal. Spot gold XAU= needs to clear a resistance at $1,440 before running towards $1,467 per ounce or higher. The chart has developed to a such a pivotal point that a rise above $1,440 would open the way towards $1,476, while a drop below $1,430 may force gold to fall back to $1,415. [GOL/]

* Copper fell on demand concerns, as top metals consumer China raised interest rates and inventories rose in Asia, while strong oil prices fanned worries inflation could hamper global growth. LME copper MCU3=LX is technically neutral as it is trapped within the $9,264 to $9,500 range. A rise above $9,500 per tonne would confirm an inverted head-and-shoulders pattern, with a target to be established at $9,700, while a fall below $9,300 will extend to $9,150. [MET/L]

$1= $0.96 Canadian Reporting by Rahul Karunakar; editing by Jeffrey Hodgson

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