November 2, 2010 / 3:19 PM / 8 years ago

CANADA STOCKS-TSX firms but golds dampen move higher

 * TSX rises 0.07 percent to 12,674.26
 * Six of 10 sectors fall, resources keep broad market up
 * Investors eye Fed decision, U.S midterm elections
 * Canada says no decision yet on BHP-Potash deal
 TORONTO, Nov 2 (Reuters) - Toronto’s main stock index was slightly higher on Tuesday morning as commodity prices firmed on expectations the U.S. Federal Reserve is set to pump more money into the U.S. economy but gold-mining shares fell.
 The index’s energy group gained 0.2 percent, while its materials sector rose 0.25 percent. Canadian Natural Resources (CNQ.TO) was up 0.67 percent at C$37.42, and Teck Resources TCKb.TO advanced 0.5 percent to C$45.79.
 Gold-mining shares were under pressure, however, despite a rise in bullion prices. Kinross Gold (K.TO) fell 0.1 percent to C$18.16, while Agnico-Eagle (AEM.TO) lost 0.8 percent to C$77.77.
 Talisman Energy Inc TLM.TO, Canada’s No. 4 independent oil producer, rose 1.95 percent to C$18.80 after it said its third-quarter profit rose four-fold, helped by higher commodity prices and increased its full-year production outlook. [ID:nSGE6A10EV]
 As a two-day meeting of the Fed’s policymaking committee got under way, the Thomson Reuters-Jefferies CRB index .CRB, a global commodities benchmark, rose about 1 percent, with the price of oil jumping and gold firming.
 Markets are generally priced for the Fed to commit to buying at least $500 billion in bonds over the next few months to try to stimulate the economy. [ID:nLDE6A11F2]
 At 10:50 a.m. (1450 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was up 9.45 points, or 0.07 percent, at 12,674.26.
Six of the index’s 10 sectors were down, but the strength in energy and materials kept the overall market slightly in positive territory.
 “It’s a small move higher. I think overall North American markets are in wait-and-see mode as they wait for mainly for outcomes of U.S. events,” said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.
 “I expect we’ll see another day somewhat like yesterday where it bounces around but there’s not a strong direction one way or another.”
 Midterm U.S. elections were also being monitored, with polls suggesting Republicans will gain control of the U.S. House of Representatives, while Democrats retain control of the Senate. [ID:nN01165335]
 Declining sectors posted marginal losses, including the hefty financials group. The group was weighed by a 1.8 percent drop in Manulife Financial (MFC.TO), one of the country’s biggest insurers, to C$12.53. Canadian insurers’ results are due soon and are seen stronger, but messy because of low interest rates and writedowns. [ID:nN01219829]
 Potash Corp POT.TO continued to be a notable stock to watch as the federal government neared a decision on whether to allow BHP Billiton’s  (BHP.AX) $39 billion takeover bid for the world’s top fertilizer producer. The stock was up 0.24 percent at C$149.09 in early trade.
 “The fact that it has moved higher does suggest that investors are expecting approval and potentially a higher bid,” said Warne, noting that Edward Jones currently has a “sell” recommendation on the stock because it thinks there is greater potential for downside, particularly if the deal is blocked or heavy conditions are imposed.
 “There’s been lots of rumors that they may raise it but when you do the math it may not be increased to the point where the stock is now,” Warne added.
 Canada insisted on Tuesday it had made no decision yet on what to do about BHP Billiton’s bid, even as two newspapers reported that bureaucrats were advising that the bid should go ahead.
 A decision is due by the end of Wednesday. (0400 GMT, Nov. 4)  By law, Ottawa must decide whether the takeover would have a net benefit to Canada. [ID:nN02206060]
 ($1=$1.01 Canadian)  (Reporting by Ka Yan Ng; editing by Peter Galloway)                                        

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