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TSX Flat As Financials Weigh; Loblaw Jumps - Canadian Commentary


Canadian stocks were struggling to move higher Thursday morning amid cautious trade, with traders awaiting cues from the budget talks in the U.S. Also, concerns over the euro zone weighed on trader sentiment.

The European Central Bank on Thursday slashed the growth outlook for the 17-nation economy for this year and next, and unveiled its first projection for 2014 that showed a recovery in the currency-bloc. The latest Eurosystem staff macroeconomic projections show annual real GDP growth in a range between -0.6 percent and -0.4 percent for 2012. This means the mid-point was lowered to -0.5 percent from -0.4 percent seen in September.

Meanwhile, Standard and Poor's lowered Greece's credit rating to 'selective default' from 'CCC', stating the Greek government's invitation to private sector bondholders on December 3 to participate in a series of debt buyback auctions amounted to a distressed debt restricting.

The S&P/TSX Composite Index edged up 3.13 points or 0.03 percent to 12,160.42, a day after snapping its two-session losing streak.

Among financial stocks, TD Bank Group (TD.TO) lost nearly 2 percent even after it said its fourth-quarter net income improved to C$1.60 billion, from C$1.59 billion, with adjusted net income rising to C$1.76 billion, from C$1.66 billion a year earlier. Adjusted earnings per share totaled C$1.83 for the recent quarter. Analysts expected earnings per share of C$1.81 for the quarter. The bank announced a dividend of C$0.77 per share. Separately, the bank announced that it would buy Epoch Holding Corp. (EPHC) for approximately $668 million.

National Bank of Canada (NA.TO) slipped 0.50 percent despite reporting improved fourth-quarter net income at C$333 million or C$1.97 per share compared to C$274 million or C$1.62 per share last year. Excluding items, net income was C$325 million or C$1.93 per share compared to C$285 million or C$1.68 per share prior year. Analysts expected the bank to report profit per share of C$1.93 for the quarter.

CIBC (CM.TO) eased 0.50 percent even after reporting that its fourth-quarter net income increased to C$850 million or C$ 2.02 per share from C$754 million or C$1.79 per share prior year. Adjusted profit per share was C$2.04. Analysts expected the company to report profit per share of C$1.99 for the quarter.

The price of crude oil was moving lower as traders look to the developments in the US budget talks. President Barack Obama said that a deal to avert the so-called fiscal cliff was possible in 'about a week' if Republicans compromised on taxes. Crude for January delivery lost $1.73 to $86.15 a barrel.

In the oil patch, Ecopetrol SA (ECP.TO) lost about 3 percent and Crescent Point Energy (CPG.TO) was down 1.50 percent. Meanwhile, Niko Resources (NKO.TO) gained about 6 percent.

Among base-metals stocks First Quantum Minerals (FM.TO) dipped over 3 percent.

Dollar stores operator Dollarama Inc. (DOL.TO) reported improved third quarter net income at C$51.5 million or C$6.8 per share compared to C$41.8 million or C$0.55 per share in the same period last year. Normalized net earnings for the period was C$53.7 million or C$0.71 per share. Analysts expected the company to earn C$0.70 per share for the quarter. The stock slipped 1 percent.

Meanwhile, gold stocks were recovering from their recent losses amid a marginal rebound in bullion prices. The price of gold was moving higher Thursday morning as the US dollar was ticking lower amid weekly jobless claims data from the Labor Department. Gold for February rose $9.80 to $1,703.60 an ounce.

Detour Gold (DGC.TO) and Yamana Gold (YRI.TO) gathered around 3 percent each. Royal Gold (RGL.TO) and Agnico-Eagle Mines (AEM.TO) were up around 2 percent each.

Grocery chain operator Loblaw Companies (L.TO) jumped nearly 20 percent after announcing plans to contribute a significant portion of its real estate assets with a current market value of more than $7 billion to the planned REIT.

Athletic apparel company Lululemon Athletica Inc. (LLL.TO) gained 2 percent after reporting third quarter net income of $57.3 million or $0.39 per share, up from $38.8 million or $0.27 per share last year. Analysts expected the company to earn $0.37 per share for the quarter.

In economic news, a report from the Statistics Canada revealed that the total value of building permits rose 15 percent to $7.5 billion in October, reversing a 12.7 percent decline in September. The increase was primarily the result of higher construction intentions for non-residential buildings, mostly in Ontario and Quebec.

From the U.S., the Labor Department said jobless claims fell to 370,000, a decrease of 25,000 from the previous week's revised figure of 395,000. Economists had expected jobless claims to drop to 380,000 from the 393,000 originally reported for the previous week.

Elsewhere, the euro area economy slid into recession in the third quarter, an updated report from Eurostat confirmed. The gross domestic product fell 0.1 percent from a quarter ago, when it dropped 0.2 percent. The figures matched the preliminary estimate released on November 15.

The Bank of England maintained its quantitative easing at GBP 375 billion and the interest rate at 0.50 percent, as widely expected.

Meanwhile, the European Central Bank left its key interest rate unchanged at a record low for the fifth consecutive month in December. The main refinancing rate was held at 0.75 percent.

by RTTNews Staff Writer

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