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Commodities Push TSX Higher Monday Morning - Canadian Commentary

4/2/2012 11:18 AM ET

Toronto stocks were extending gains for a second session Monday morning as commodities recovered from their early trading losses amid mixed cues on global economy. While activity in the U.S. manufacturing sector continued to expand in the month of March, data from across the Atlantic revealed euro zone manufacturing downturn worsened as initially estimated in March

The S&P/TSX Composite Index gathered 88.97 points or 0.72 percent to 12,481.15, a day after snapping its three-session losing streak.

The Diversified Materials Index gained nearly 1 percent. Ivanhoe Mines (IVN.TO) moved up over 2 percent after it said it would sell its stake in Mongolian coal miner SouthGobi Resources Ltd. (SGQ.TO) to Aluminum Corporation of China Ltd., known as Chalco, for about C$900 million, or C$8.48 per share. Shares of SouthGobi skyrocketed over 15 percent to C$7.65.

Base-metals miner Imperial Metals (III.TO) gathered nearly 1 percent after reporting fiscal 2011 net income of C$48.7 million or C$0.66 per share, up from C$38.4 million or C$0.53 per share in the prior-year period. However, adjusted net income was C$31.33 million or C$0.42 per share down from C$45.70 million or C$0.63 per share a year ago. Analysts were expecting the company to report earnings of C$0.61 per share for the period.

The price of crude oil was recovering from its 6-week low Monday morning, with crude for May adding $0.82 to $103.84 a barrel.

In the oil patch, Coastal Energy (CEN.TO) gained close to 10 percent. MEG Energy (MEG.TO) and Tourmaline Oil (TOU.TO) rose over 3 percent each.

Equipments solutions provider Hyduke Energy Services (HYD.TO) gained over 20 percent to C$0.600 after it turned to black in fourth quarter, reporting profits of C$1.1 million or C$0.04 per share compared to a loss of $1.8 million or $0.07 per share last year.

Financial services company HOMEQ Corp (HEQ.TO) skyrocketed over 20 percent to C$9.450 after announcing that Birch Hill Equity Partners would acquire it for $9.50 per share.

Gold for June was adding $12.00 to $1,683.90 an ounce.

Among gold stocks, Royal Gold (RGL.TO) added close to 4 percent, while Goldcorp. (G.TO) was gaining over 1 percent.

West Africa focused gold miner Avion Gold Corp. (AVR.TO) gained 6 percent despite reporting lower fourth quarter net income of $8.07 million or $0.02 per share compared to $20.39 million or $0.05 per share in the year-ago quarter.

Precious metals miner High River Gold Mines (HRG.TO) slipped 1 percent even after reporting full year 2011 net income of C$170.4 million or C$0.20 per share, up from C$111.7 million or C$0.13 per share in the prior year.

Diversified natural resource company Mercator Minerals (ML.TO) lost nearly 3 percent after it said its fourth quarter adjusted net income declined to C$1.5 million or breakeven per share from C$8.1 million or C$0.04 per basic share in the prior year quarter.

AEterna Zentaris Inc. (AEZ.TO) plummeted over 65 percent after the company said that a late-stage study of their colorectal cancer drug candidate missed its primary goal of improving overall survival.

In economic news from the U.S. the Institute for Supply Management said its index of activity in the manufacturing sector climbed to 53.4 in March from 52.4 in February, with a reading above 50 indicating growth in the sector. Economists had expected the index to edge up to a reading of 53.0.

Simultaneously, the Commerce Department estimates put overall U.S. construction spending at a seasonally adjusted annualized rate of $808.9 billion, a 1.1 percent drop from revised January estimates. That marks the largest drop in overall construction spending since July 2011. Furthermore, initial figures which had shown a 0.1 percent drop off in construction spending in January were revised further down to show a 0.8 percent decline.

Elsewhere, euro zone manufacturing downturn worsened as initially estimated in March, final data from Markit Economics showed. The Purchasing Managers' Index fell to 47.7 in March, a three month low, from 49 in the previous month. The final reading matched flash estimate.

Meanwhile, unemployment rate in the euro zone rose to a new record high in February, data from Eurostat showed. The seasonally adjusted jobless rate rose to 10.8 percent from 10.7 percent in January. The outcome was in line with economists' forecast. The rate was 10 percent in February 2011.

A separate report from the Markit Economics showed that German manufacturing sector contraction in March was less severe than estimated earlier. The seasonally adjusted Markit/BME purchasing managers' index fell to 48.4 in March from 50.2 in February.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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