February 5, 2008 / 2:16 PM / in 10 years

Toronto stocks to follow Europe, commodities down

TORONTO, Feb 5 (Reuters) - The Toronto Stock Exchange’s main index was set to dip on Tuesday as fears over a slowing U.S. economy and lower commodity prices were seen trumping some positive corporate results from Husky Energy HSE.TO and CGI Group GIBa.TO.

Husky, Canada’s No. 3 oil producer and refiner, reported a doubling of fourth quarter profit, beating expectations. For details, see: [nN05652572]

CGI, which provides outsourcing and information technology, reported a 66 percent jump in first quarter profit. For details, see: [nN0516882]

However, the overall TSX, which is heavy on resource issues, could follow the prices of commodities lower.

U.S. crude was off 77 cents at $89.25 a barrel, still under pressure from expectations that demand will decline as the U.S. economy slows.

With the exception of platinum, precious and base metals were also lower on Tuesday, which could undercut the heavyweight TSX materials sector.

In that sector, a Barrick Gold (ABX.TO) official told a mining conference in Cape Town the company expects its Buzwagi mine in Tanzania to reach production next year, at cash costs under $300 an ounce.

Toronto-based Barrick is the world’s biggest gold producer. For details, see: [nL05274991]

Elsewhere, European stocks followed Asian markets lower, setting the stage for a soft start in North America.

“Overseas would certainly indicate that we’re likely to start out the day on a negative note,” said Michael Sprung, president at Sprung & Co Investment Counsel. “I suspect we’ve still got people profit taking from last week.”

Recurring worry over the economic health of the United States, Canada’s biggest trading partner, and a downgrade of Goldman Sachs & Co (GS.N) were also set to weigh on the TSX, particularly its financial sector.

U.S. investors were also weighing the impact of voting in the presidential primaries. For details, see: [nN05644295]

The S&P/TSX composite index .GSPTSE has climbed in seven of the last 10 trading days, adding 9.3 percent. It starts the day at 13,258.16 after declining 60.21 points, or 0.45 percent, in the previous session.

$1=$1.00 Canadian; Editing by Scott Anderson Reporting by Jonathan Spicer

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