Toronto stocks to punch higher on oil, mine deals

Thu Mar 27, 2008 9:13am EDT
 
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TORONTO, March 27 (Reuters) - The Toronto Stock Exchange's main index was seen adding to recent gains on Thursday, supported by hot oil, base metals, and news that Teck Cominco Ltd TCKb.TO has agreed to jointly develop a massive copper project in Panama.

Riding a four-day winning streak, Canada's benchmark index could also benefit from a Texas court ruling that may force banks to finance the $20-billion leveraged buyout of U.S. radio operator Clear Channel Communications (CCU.N: Quote).

The buyout was in doubt the day before, and cast a shadow over the stability of credit financing a blockbuster Canadian deal -- the takeover of telecom firm BCE Inc (BCE.TO: Quote).

TSX oil, gas and mining firms were seen getting a boost from higher underlying commodities on Thursday, including $107-a-barrel crude oil after saboteurs blew up one of Iraq's two main export pipelines.

Rick Hutcheon, president and chief operating officer at RKH Investments, said that although oil isn't too much above sustainable levels, much of its strength is driven by speculation.

"That's good news if you're a commodity producer, and there are many in Canada, but I'm not sure I'd place a bet that commodities will continue to rise," he said.

In the TSX materials sector, diversified miner Teck Cominco and Inmet Mining Corp IMN.TO said they will develop the Petaquilla copper project in Panama, the costs of which recently soared to $3.5 billion. For details, see: [nN26319833]

The deal suggests TSX miners are willing to pay a premium to uncover metals while the prices are hot.

Elsewhere among miners, Barrick Gold (ABX.TO: Quote) reached a preliminary deal to acquire 4.7 percent of Papua New Guinea gold miner Allied Gold Ltd ALD.AX. See: [nSYD117453]

The S&P/TSX composite index .GSPTSE starts the day at 13,391.86 after adding 69.64 points, or 0.5 percent, in the previous session.

($1=$1.02 Canadian) (Reporting by Jonathan Spicer; Editing by Scott Anderson)