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TSX Flat Amid Mixed Cues - Canadian Commentary

Canadian stocks were little changed Monday amid weak commodities and varied cues from the global equity markets. While, last week's economic data from China raised concerns over the strength of the global economy, a surge in Spanish 10-year bond yields today rekindled worries over the euro zone debt situation.

The Chinese economy expanded at the weakest pace in nearly three years in the first quarter of 2012, while a report earlier last week revealed that China unexpectedly swung to a trade surplus in March.

From the U.S., the financial services giant Citigroup Inc. posted a decline in its first-quarter net income to $2.93 billion or $0.95 per share from $3.0 billion a year ago. However, excluding the impact of CVA/DVA and the net gain on minority investments, quarterly net income was $3.4 billion, 8 percent higher than the comparable first quarter 2011 results. Analysts were expecting the company to report earnings per share of $1.00 for the first quarter.

The S&P/TSX Composite Index eased 0.64 points or 0.01 percent to 12,039 75, a day after snapping its two-session winning streak.

The price of crude oil flat Monday morning as traders fret over the euro zone debt situation after the Spanish 10-year bond yields today surged above 6 percent level. Crude for May delivery edged down $0.45 to $102.38 a barrel.

In the oil patch, Suncor Energy (SU.TO) and Imperial Oil (IMO.TO) moved up around 2 percent each.

Secure Energy Services (SES.TO) advanced 7 percent. Fairborne Energy (FEL.TO) gained over 7 percent after announcing that it would divest its interest in the Greater Sinclair area located in Manitoba and Saskatchewan for $80 million.

The price of gold was moving lower amid a generally steady US dollar. Gold for June eased $9.20 to $1,651.00 an ounce.

Among gold plays, Royal Gold (RGL.TO) lost over 3 percent. Detour Gold (DGC.TO), Seabridge Gold (SEA.TO) and Kirkland Lake Gold (KGI.TO) were down around 2 percent each.

Silver ore miner Endeavour Silver Corp. (EDR.TO) surrendered nearly 3 percent after it said it would acquire 100 percent interests in AuRico Gold's operating El Cubo silver-gold mine in Guanajuato State, Mexico and the Guadalupe y Calvo silver-gold exploration project in Chihuahua State, Mexico, for total consideration of up to $250 million.

Meanwhile, the Diversified Materials Index lost over 2 percent. First Quantum Minerals (FM.TO) was down over 5 percent.

SouthGobi Resources (SGQ.TO) lost over 12 percent after announcing that Mongolian authorities have made a request to suspend exploration and mining activity on certain licenses of the coal miner.

Uranium miner Quest Rare Minerals (QRM.TO) reported a narrower first quarter net loss of $557,870 compared to a net loss of $7.55 million in the year ago quarter. The stocks slipped nearly 2 percent.

In economic news, Statistics Canada said foreign investors resumed their acquisition of Canadian securities in February, adding $12.5 billion to their holdings, with the federal government bonds attracting a major share. Meanwhile, Canadian investors reduced their holdings of foreign securities by $2.2 billion, marking the first such divestment in 10 months.

From the U.S, the Commerce Department's initial estimates put the total level of U.S. retail sales at a seasonally adjusted level of $411.1 billion for March, an increase of 0.8 percent over February levels. And while February's retail figures were revised down slightly to show 1 percent growth rather than the 1.1 percent initially reported, the March sales levels came in significantly higher than the 0.3 percent growth predicted by most economists.

Simultaneously, the New York Fed said its general business conditions index plunged to 6.6 in April from 20.2 in March, although a positive reading indicates an increase in manufacturing activity. Economists had expected the index to edge down to 18.0.

Elsewhere, euro zone trade balance moved to a surplus in February, but was lower than forecast by economists, data from Eurostat showed. The trade surplus amounted to EUR 2.8 billion in February compared to revised EUR 7.9 billion deficit in January. Economists expected a surplus of EUR 3 billion. In February last year, the balance was in a deficit of EUR 2.8 billion.

by RTT Staff Writer

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