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TSX Poised For Lower Open As Euro Worries Resurface - Canadian Commentary

5/2/2012 8:56 AM ET

Canadian stocks may open lower Wednesday amid faltering commodities and mixed cues from the global equity markets. While strong manufacturing data from the U.S. and China are likely to support trader sentiment, record unemployment in the euro zone escalated concerns over the economic development in the region.

However, stock specific movements may be ruled out amid a mixed batch of corporate earnings reports.

U.S. stock futures were pointing to a lower open after data revealed that private sector employment increased by less than expected in the month of April.

On Tuesday, the S&P/TSX Composite Index extended gains for a fifth session, adding 40.09 points or 0.33 percent to 12,332.79.

The price of crude oil was ticking lower Wednesday morning as traders await cues from the official inventories data. Today during trading hours, the EIA will release its US crude inventories data for the week ended April 27. Analysts expect crude oil inventories to gain 2.50 million barrels, while gasoline stocks are seen dipping by 1 million barrels last week. Crude for June slipped $0.35 to $105.81 a barrel.

The price of gold was moving lower Wednesday morning as the US dollar was trading firm amid private sector employment report. Gold for June shed $4.20 to $1,658.20 an ounce.

In corporate news from Canada, Barrick Gold (ABX.TO) posted first-quarter net earnings of $1.03 billion or $1.03 per share versus $1.00 billion or $1.00 per share last year. Adjusted net earnings grew to $1.09 billion or $1.09 per share from $1.00 billion or $1.01 per share in same quarter a year ago, reflecting a higher average realized gold price. Analysts were expecting the company to earn $1.11 per share.

Gold mining company Yamana Gold Inc. (YRI.TO) reported improved first quarter net earnings of $170 million or $0.23 per share compared with net earnings of $148 million or $0.20 per share for the first quarter of 2011. Adjusted earnings were $184 million or $0.25 per share, up from $152 million or $0.21 per share in the same quarter of 2011. Analysts were expecting the company to report earnings of $0.25 per share this quarter. The company also announced dividend of $0.055 per share

Insurance services provider Intact Financial Corp. (IFC.TO) reported a lower first quarter net income of C$177 million or C$1.33 per share compared to C$157 million or C$1.42 per share a year ago. Adjusted earnings were C$1.59 per share this year and C$1.43 per share in the prior-year. The company declared quarterly dividend of $0.40 per share. Separately, the company said it would acquire JEVCO Insurance Co, a wholly-owned subsidiary of Westaim Corp. (WED.TO), for $530 million cash

Advanced information solutions provider MacDonald Dettwiler (MDA.TO) reported improved first-quarter net earnings of C$33 million or C$1.05 per share compared to C$28 million or C$0.69 per share last year. Operating earnings were C$29 million or C$0.92 per share up from C$27 million or C$0.65 per share in the same quarter last year. Analysts were expecting the company to earn C$0.88 per share.

Business software provider OpenText Corp. (OTC.TO) agreed to acquire EasyLink Services International Corp. (ESIC) for $7.25 per share in an all-cash deal valued at about $310 million, inclusive of debt..

In economic news from south of the border, the Automatic Data Processing, Inc. (ADP) said that private sector employment increased by 119,000 jobs in April following a downwardly revised increase of 201,000 jobs in March. Economists had expected an increase of about 183,000 jobs compared to the addition of 209,000 jobs originally reported for the previous month.

Elsewhere, unemployment rate in euro area increased to new record high in March, the latest figures from Eurostat revealed. The seasonally adjusted jobless rate rose to 10.9 percent in March from 10.8 percent in February. The outcome was in line expectations. In March 2011, the rate was 9.9 percent. In March, the number of unemployed in euro area increased by 169,000 from a month earlier to 17.365 million.

Unemployment in Germany rose unexpectedly in April suggesting that the economy may have lost momentum after the euro area debt crisis intensified with Spain assuming the center stage amid renewed tensions in the region. The Federal Labor Agency said that the number of unemployed persons in the country rose by 19,000 from a month earlier to 2.875 million in April, after adjusting for seasonal variations. This was in contrast to economists' expectations for a decrease of 10,000. The number persons without work in March was 13,000 less than a month earlier.

by RTT Staff Writer

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