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TSX Down Amid Global Growth Worries - Canadian Commentary

TSX Down Amid Global Growth Worries - Canadian Commentary

Canadian stocks were extending losses Thursday morning as risk appetite waned amid doubts over the Federal Reserve's monetary stimulus program after the recent FOMC minutes revealed that a number of Federal Reserve officials think the central bank might have to vary the pace of asset purchases before there is substantial improvement in the labor market. It appears possible that asset purchases could be scaled back at the upcoming meeting in March.

Also, weak cues from the global equity and commodities markets, and a mixed bag of earnings reports weighed on trader sentiment.

The S&P/TSX Composite Index shed 76.92 points or 0.60 percent to 12,637.13, after losing nearly 100 points in the previous session.

The price of crude oil was extending losses Thursday morning amid doubts over the Federal Reserve's monetary stimulus program and as traders await cues from the official inventories data, due out later today. Today during trading hours, the EIA will release its US crude oil inventories data for the weekended February 15. Analysts expect crude oil inventories to add 2 million barrels, while gasoline stocks are seen shedding 0.90 million barrels last week.

Crude for April lost $2.13 to $93.09 a barrel.

In the oil patch, Imperial Oil (IMO.TO), Baytex Energy Corp. (BTE.TO) and Suncor Energy (SU.TO) surrendered around 2 percent each.

Oilfield services and trucking company Mullen Group Ltd. (MTL.TO) lost 7 percent after reporting a much lower fourth-quarter net income of C$21.8 million or C$0.25 per share compared with C$47.5 million or C$0.54 per share last year. Excluding items, adjusted earnings for the quarter were C$29.7 million or C$0.34 per share, compared with C$38.8 million or C$0.48 per share a year ago. Analysts estimated earnings of C$0.38 per share on revenues of C$354.49 million for the quarter.

Bombardier Inc. (BBD_A.TO, BBD_B.TO) surrendered nearly 7 percent after reporting that its fourth-quarter net income amounted to $14 million or break even per share down from $214 million or $0.12 per share for the corresponding period the previous year. On an adjusted basis, net income amounted to $188 million or $0.10 per share compared to $227 million or $0.13 per share in the year ago quarter.

Fertilizer maker Agrium Inc. (AGU.TO) shed over 3 percent, while Potash Corp. (POT.TO) was losing nearly 2 percent.

Food distributor Loblaw Companies (L.TO) slipped 0.50 percent after posting lower fourth quarter profit of C$143 million or C$0.48 per share compared to C$174 million or C$0.60 per share last year. Analysts estimated earnings per share of C$0.63 for the period.

Quick-service restaurants company Tim Hortons Inc. (THI.TO) reported a marginal dip in its fourth-quarter net income at C$100.3 million, from C$103.0 million last year. Further, the company said that it has obtained regulatory approval from the Toronto Stock Exchange to commence a new share repurchase program for up to C$250 million in common shares. The stock shed 4 percent.

Building materials and accessories company RONA Inc. (RON.TO) reported narrower fourth-quarter loss of C$17.93 million or C$0.15 per share compared to C$153.58 million or C$1.19 per share in the same period last year. Net income, excluding unusual items and non-recurring items, for the quarter was C$6.6 million or C$0.05 per share. Analysts expected the company to earn C$0.12 per share for the quarter. The stock was down about 4 percent.

Meanwhile, gold stocks were moving higher as the yellow metal was leveling off from its 7-month low, even as the US dollar was trading firm amid doubts about the US Federal Reserve's asset purchase program. Gold for April delivery edged up $0.20 to $1,578.20 an ounce.

Gold miner Yamana Gold (YRI.TO) gained nearly 5 percent after reporting improved fourth-quarter net earnings of $169.2 million or $0.22 per share compared to $89.6 million or $0.12 per share in the fourth quarter of 2011. Adjusted earnings were $197.4 million or $0.26 earnings per share compared with $184.2 million or $0.25 per share in the year ago quarter. Analysts expected the company to report earnings of $0.25 per share for the quarter.

Agnico-Eagle Mines (AEM.TO) rose over 4 percent.

Mid-tier gold mining company Iamgold (IMG.TO) moved up over 2 percent after reporting fourth-quarter net income of $84.6 million or $0.22 per share, compared with $133.6 million or $0.36 per share last year. Excluding items, adjusted earnings for the quarter were $90 million or $0.24 per share, compared with $107.8 million or $0.29 per share a year ago. Analysts estimated earnings of $0.25 per share on revenues of $458.30 million for the quarter.

Alamos Gold (AGI.TO) added about 1 percent after reporting fourth-quarter profit of $37.91 million or $0.31 per share, up from $21.29 million or $0.18 per share in the same period last year.

Metals and mining company American Silver Corp. (PAA.TO) announced that its board has increased first quarter cash dividend by 150 percent to $0.125 per common share. The stock added over 5 percent.

In economic news from the U.S., the Labor Department said its consumer prices index was unchanged in January after coming in flat in December, while economists had expected the index to inch up by 0.1 percent. Excluding food and energy prices, the core consumer price index rose by 0.3 percent in January following a 0.1 percent increase in December. Core prices had been expected to rise by 0.2 percent.

A separate report from the Labor Department revealed that initial jobless claims climbed by 20,000 to 362,000 in the weekended February 16, from the previous week's revised figure of 342,000. Economists had been expecting jobless claims to rise to 359,000 from the 341,000 originally reported for the previous week.

From the euro zone, Germany's private sector business activity slowed in February, preliminary results of a survey by Markit Economics revealed. The flash composite output index, that measures performance of both manufacturing and services sectors, fell to 52.7 in February from 54.4 in January.

A flash estimate from the Markit Economics showed that the decline in euro zone private sector deepened in February, contrasting with the easing trend seen in the previous three months. The flash composite output index fell unexpectedly to 47.3 in February from 48.6 in January. The reading was forecast to rise to 49. A below-50 reading suggests that the sector continues to contract.

by RTT Staff Writer

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