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TSX Flat On US Fiscal Cliff, Soft Inflation Data - Canadian Commentary


Canadian stocks were little changed Friday morning as risk appetite waned after a setback in U.S. fiscal cliff negotiations. If no agreement can be reached by the end of the year, automatic spending cuts and tax increases will go into effect - measures that many analysts agree would push the world's largest economy back into recession. The House has now gone into recess until after Christmas.

Meanwhile, Canada's annual inflation rate fell to a three-year low in November, clogging Bank of Canada's stance to raise rates soon.

The S&P/TSX Composite Index edged up 5.38 points or 0.04 percent to 12,394.10, a day after snapping its two-session winning streak.

BlackBerry maker Research In Motion (RIM.TO) dived 15 percent after reporting that its third-quarter GAAP net income plunged to $9 million, or $0.02 per share from $265 million or $0.51 per share, in the same quarter last year. Adjusted net loss for the latest-quarter was $114 million or $0.22 per share. Analysts expected the company to report a loss of $0.35 per share.

Gold stocks were trading firm amid a rebound in bullion prices. The price of gold was leveling off from its four-month low Friday morning on safe-haven buying amid a setback in U.S. fiscal cliff negotiations. Gold for February gained up $11.10 to $1,657.00 an ounce.

Among gold plays, Yamana Gold (YRI.TO), Eldorado Gold (ELD.TO) and Seabridge Gold (SEA.TO) rose over 3 percent each.

Barrick Gold (ABX.TO) and Agnico-Eagle Mines (AEM.TO) gained about 2 percent each.

The price of crude oil was moving lower Friday morning as traders were concerned over demand growth after a setback in U.S. fiscal cliff negotiations. Crude for February lost $1.62 to $88.51 a barrel.

In the oil patch, Niko Resources (NKO.TO) was down close to 5 percent, while Suncor Energy (SU.TO) and Nexen Inc. (NXY.TO) were adding about 1 percent each.

Cogeco Cable Inc. (CCA.TO) shed 4 percent after announcing that it would acquire PEER 1 Network Enterprises (PIX.TO) by way of takeover bid of C$3.85 in per share, in cash. The purchase price values PEER 1's equity at approximately $526 million on a fully diluted basis. Shares of PEER 1 Network jumped 30 percent

Base-metals miner Teck Resources (TCK_B.TO) said coal sales for the fourth quarter are expected to exceed prior guidance of 6.2 million tonnes, and that production for the first quarter of 2013 is not expected to be materially impacted by the damage to Berth 1 at Westshore Terminals. The stock was up 1 percent

Nigeria focused oil exploration and production company Oando Energy Resources (OER.TO) jumped 13 percent after announcing that it would acquire ConocoPhillips' (COP) Nigerian businesses for approximately $1.79 billion.

Precious metals miner Queenston Mining (QMI.TO) edged up 0.75 percent after announcing that its shareholders have approved the acquisition of the company by Osisko Mining Corp.(OSK.TO), in an all-stock deal valued at about C$550 million. Shares of Osisko moved up 1 percent.

Uranium miner Ditem Exploration (DIT.TO) soared 20 percent after it said it has sold its 2 percent NSR on an asset called, the Matoush Property to Strateco Resources for C$1 million. Yesterday, the stock jumped 25 percent.

In economic news, Statistics Canada said inflation recorded its smallest year-over-year gain, rising just 0.80 percent in November. The consumer price index (CPI) rose 1.2 percent in October. On a seasonally adjusted monthly basis, the CPI decreased 0.2 percent in November after increasing 0.2 percent in October.. Meanwhile, The Bank of Canada's core index rose 1.2 percent in the 12 months to November, following a 1.3 percent increase in October.

Separately, the agency said real gross domestic product edged up 0.1 percent in October, after stalling in September. The output of service industries advanced 0.1 percent in October, largely due to increases in wholesale and retail trade. Goods production was unchanged in October. Increases in mining and oil and gas extraction and utilities were offset by declines in manufacturing and construction

From the U.S, the Commerce Department said that durable goods orders increased by 0.7 percent in November following a 1.1 percent increase in October. Economists had expected orders to increase by 0.5 percent, matching the increase that had been reported for the previous month. Excluding a 1.1 percent drop in orders for transportation equipment, durable goods orders surged up by 1.6 percent in November compared to a 1.9 percent jump in October.

From the euro zone, Germany's consumer sentiment is set to deteriorate in January, survey results from market research group GfK showed. The forward-looking index fell to 5.6 from a revised value of 5.8 in December. The index was forecast to remain unchanged at 5.9 points, the originally estimated figure for December.

Meanwhile, the U.K. economy grew 0.9 percent sequentially in the third quarter instead of previously estimated 1 percent expansion, final data from the Office for National Statistics showed. The third quarter growth reversed three straight quarters of contraction. Gross domestic product slipped 0.4 percent in the second quarter and by 0.2 percent in the first quarter of 2012.

by RTTNews Staff Writer

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