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TSX Flat As US Fiscal Cliff In Focus - Canadian Commentary


Canadian stocks were little changed Friday morning as traders concerned over a slow progress in the US budget talks. However, commodities were steady after China reported expansion in manufacturing activity, supporting the resource-heavy main index.

Financial stocks were flat after Standard & Poor's has downgraded the ratings of six of Canada's financial institutions by one notch, citing a softening economy, low interest rates and pressure from the headwinds facing Canada's economy.

The S&P/TSX Composite Index edged up 2.53 points or 0.02 percent to 12, 291.69, a day after snapping its four-session winning streak

The Diversified Materials Index gained over 1 percent, with Inmet Mining (IMN.TO) adding nearly 4 percent. Teck Resources (TCK_B.TO) and First Quantum Minerals (FM.TO) gathered over 1 percent each.

The price of gold was little changed Friday morning as the US dollar was steady amid the inflation data. Gold for February edged down $0.20 to $1,695.70 an ounce.

Among gold plays, Centamin Plc (CEE.TO) gained back around 25 percent after the precious and base metals miner said that Egyptian General Petroleum Corp. has agreed to resume fuel supply to its principal asset Sukari Gold Mine.

Meanwhile, Vista Gold Corp. (VGZ.TO) dived close to 9 percent after announcing that it has priced an underwritten public offering of approximately 3.6 million units at a price to the public of $2.75 per unit.

The price of crude oil was recovering from its 3-week low Friday morning after data revealed expansion of manufacturing activity in China, the commodity hungry nation.

China's manufacturing activity expanded at the fastest pace in 14 months in December amid a build-up in new orders, preliminary results of a survey by Markit Economics revealed. The headline HSBC/Markit purchasing managers' index rose to 50.9 in December from 50.5 in November. This was the highest reading in 14 months.

Crude for January added $0.59 to $86.48 a barrel.

In the oil patch, Niko Resources (NKO.TO) lost about 3 percent, while Sunlife Financial (SLF.TO) and Nexen Inc. (NXY.TO) were flat.

Fertilizer maker Rio Verde Minerals Development (RVD.TO) gained 10 percent after it said it would be acquired by B&A Mineração S.A at a price of C$0.40 per share in cash.

Financial stocks were trading flat even after a downgrade by Standard & Poor's. Laurentian Bank (LB.TO) rose nearly 1 percent, while CIBC (CM.TO), Scotiabank (BNS.TO) and Royal Bank (RY.TO) were little changed.

In economic news from Canada, Statistics Canada said manufacturing sales declined 1.4 percent in October to $48.8 billion, reflecting drops in the aerospace product and parts, the motor vehicle assembly, and the primary metal industries. However, these declines were partly offset by higher sales in the petroleum and coal product as well as the wood product industries.

From the U.S., the Labor Department said its consumer price index fell by 0.3 percent in November following a 0.1 percent increase in October. Economists had been expecting prices to edge down by 0.2 percent. Excluding the steep drop in energy prices as well as a modest increase in food prices, the core consumer price index inched up 0.1 percent in November after rising by 0.2 percent in October. Core prices had been expected to increase by 0.2 percent.

Elsewhere, euro zone inflation slowed as estimated to 2.2 percent in November from 2.5 percent in October, final data from Eurostat showed. On a monthly basis, prices fell 0.2 percent. The decrease largely reflects slowdown in energy price growth to 5.7 percent annually from 8 percent.

Survey results from the Markit Economics showed that the euro zone private sector contracted at a slower pace as Germany recovered at the end of the year. The composite Purchasing Managers' Index rose to a nine-month high of 47.3 in December, from 46.5 in November.

Germany's private sector expanded in December after contracting for eight straight months, underpinned by service sector recovery, Markit Economics said. The flash composite output index came in at 50.5 in December, an improvement on November's 49.2.

by RTTNews Staff Writer

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