*BCE to drag TSX index lower
*Bullish oil may prolong Wednesday’s energy selloff
TORONTO, May 22 (Reuters) - The Toronto Stock Exchange’s main index was set to fall on Thursday, adding to the previous day’s steep drop, as BCE Inc (BCE.TO) looked to be in trouble and oil stoked inflation concerns.
BCE — Canada’s top telecom firm and a major player on the TSX — was set to drop after a Quebec court backed debtholders who claimed the proposed sale of the company was unfair.
The court said BCE failed to prove that the buyout — by Ontario Teachers’ Pension Plan and its U.S. private equity partners — could have been structured to provide a satisfactory share price, without harming debenture holders. For details, see: [N21449300]
The ruling jeopardizes the C$34.8-billion takeover and leaves BCE vulnerable to a selloff on Thursday morning.
“The one-hundred-dollar question is whether the deal will still be in play in six to nine months,” said Francis Campeau, broker at MF Global Canada in Montreal, who suggested BCE stock will drop from C$37.12 to between C$31 and C$32 in early activity.
“But the market will not price out (the takeover) 100 percent,” he said.
Potentially adding to the malaise, the selloff among oil and gas producers could continue on Thursday even as crude soared further, above $135 a barrel.
Bullish oil has driven the resource-heavy Canadian benchmark to record highs in recent days, but the bottom fell out of the energy sector on Wednesday with investors uncharacteristically cashing in their shares even as crude soared to record highs.
Crude’s ascent has world equity markets on the defensive as investors price in the effects of inflation and higher fuel costs on consumers and corporations.
Elsewhere, the TSX gold subsector could take a hit as the price of spot gold declined more than $7 to $924 an ounce. The subsector, which includes world heavyweights Barrick Gold (ABX.TO) and Goldcorp (G.TO), swept lower amid Wednesday’s late-session selloff.
In corporate news, Bombardier Inc (BBDb.TO) could attract attention after it said Swedish state railway SJ AB signed on to buy 20 high-speed trains for $349 million. It represents the second deal in as many days for the Canadian train maker. See: [nN22467906] and [nN21528256]
The S&P/TSX composite index .GSPTSE starts the day at 14,790.37 after dropping 256.97 points, or 1.7 percent, in the previous session. ($1=$0.98 Canadian) (Reporting by Jonathan Spicer;; Editing by Scott Anderson)