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Commodities Drag TSX Lower Friday Morning - Canadian Commentary


Canadian stocks were struggling to move higher Friday morning, with commodities suffering a set back as upbeat U.S. labor market data triggered speculation that the Federal Reserve could begin scaling back its monetary stimulus program earlier than expected.

Traders looked forward to the outcome of a two-day meeting of G7 finance ministers and central bank chiefs beginning today in the U.K.

Elsewhere, Asian stocks settled mostly higher overnight, with Japanese shares rallying to a five-year high after the yen breached the 100 yen to the US dollar mark for the first time since April 2009. European stocks rose on after data showed German exports recovered as expected in March, boosting hopes of economic revival by the end of the first quarter.

The S&P/TSX Composite Index slipped 8.43 points or 0.07 percent to 12.535.47, a day after snapping its five-session winning streak.

The price of gold was moving lower Friday morning, with the US dollar advancing versus a basket of currencies after the recent batch of upbeat macroeconomic data that triggered speculation the Federal Reserve might tighten its monetary policy in the present year instead of 2014. Gold for June surrendered $46.80 to $1,421.80 an ounce.

Among gold plays, Seabridge Gold (SEA.TO) lost nearly 5 percent. Agnico-Eagle Mines (AEM.TO) Goldcorp. (G.TO), Yamana Gold (YRI.TO) and Barrick Gold (ABX.TO) were down close to 3 percent each.

Gold miner Osisko Mining Corp. (OSK.TO) shed about 4 percent after reporting lower first-quarter net income of C$17.4 million or C$0.04 per share compared with C$30.6 million or C$0.08 per share last year. Excluding items, adjusted earnings for the quarter were C$36.4 million or C$0.08 per share, compared with C$59.6 million or C$0.15 per share a year ago. Analysts estimated earnings of C$0.06 per share for the quarter.

Private equity firm Onex Corp. (OCX.TO) slipped into the red in first quarter, reporting net loss of $271 million versus a profit of $173 million last year. On a per Subordinate Voting Share basis, loss for the period was $2.71 versus a profit of $0.51 a year earlier. The stock shed over 2 percent.

TMX Group Ltd. (X.TO) lost 3 percent after reporting that its first-quarter income from operations declined to C$60.2 million from C$79.2 million in the prior year quarter. Net income attributable to TMX Group shareholders was C$37.8 million, compared to a loss of C$4.4 million in the prior year. Earnings per share were C$0.70 in the latest-quarter, compared to a loss of C$10.82 per share last year.

The price of crude oil was moving lower Friday morning, with the US dollar trading higher versus a basket of currencies amid economic recovery hopes. Meanwhile, the OPEC, in it monthly oil market report released today, said growth in 2013 remains unchanged from the previous report at 0.8 mbd, broadly in line with the estimate for 2012, even as the performance of the first quarter of this year has been revised down based on actual data.

Crude for June lost $2.79 to $93.60 a barrel.

In the oil patch, Paramount Resources (POU.TO) lost about 6 percent. Baytex Energy Corp. (BTE.TO) and Trilogy Energy (TET.TO) shed over 2 percent each.
On the other hand, crude oil and natural gas exploration and development company Enerplus Corp. (ERF.TO) rose 4 percent after reporting a narrower first-quarter net loss of C$5.24 million or C$0.03 per share compared to a loss of C$33.82 million or C$0.18 per share last year.

Auto parts maker Magna International Inc. (MG.TO) jumped over 4 percent after reporting that its first-quarter net income increased to $369 million or $1.57 per share, from $343 million or $1.46 per share in the same quarter last year. Analysts expected the company to report earnings of $1.44 per share for the quarter.

Renewable energy and utility company Algonquin Power & Utilities Corp. (AQN.TO) reported a much improved first-quarter net earnings of C$19.2 million or C$0.10 per share, compared to C$2.3 million or C$0.02 per share for the year-ago quarter. Excluding items, adjusted net earnings for the first quarter was C$17.8 million or C$0.09 per share, compared to C$5.5 million or C$0.04 per share in the prior year quarter. Analysts expected the company to earn C$0.10 per share for the quarter. The stock was up over 3 percent.

In economic news, Statistics Canada said the rate of unemployment in Canada remained unchanged after declining in the previous month. Unemployment rate remained unchanged at a seasonally adjusted 7.2 percent, belying economists' expectations for a decline to 7.0 percent.

From the euro zone, Germany's exports grew 0.5 percent month-on-month in March, partially offsetting the 1.2 percent drop in February, the Federal Statistical Office said. The monthly rate of expansion matched economists' expectations. Imports grew 0.8 percent on a monthly basis, after declining 3.9 percent in the prior month. But the rate was below the consensus forecast of 1.5 percent.

Separately, the agency said German factory sales continued to decline in March, but at a slower pace compared to the previous month. Manufacturing turnover fell 1.8 percent year-on-year on a working day adjusted basis in March, following 3.2 percent decrease in February and a 2.6 percent fall in January.

Meanwhile, the U.K. visible trade deficit decreased slightly in March largely due to an increase in exports, the Office for National Statistics said. The deficit on trade in goods totaled GBP 9.1 billion in March, down from GBP 9.2 billion in February, but slightly above the consensus forecast of GBP 9 billion.

by RTTNews Staff Writer

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