BUSINESS

Toronto stock market slightly sinks into red at midday as RIM shares plunge

09/16/2011 08:29 EDT | Updated 01/12/2012 01:35 EST
TORONTO - The Toronto stock market racked up a triple-digit loss Friday as a plunge in tech heavyweight Research in Motion's shares along with weaker copper and oil prices weighed on the main index.

The S&P/TSX composite index shed 161.13 points to 12,263.71 as the information technology sector, as well as the influential financial, energy and mining sectors dragged it lower.

The TSX Venture Exchange lost 1.45 points to 1,762.85.

RIM stock plummeted 20 per cent, wiping out $3 billion of the company's stock value, after the BlackBerry maker reported lower device sales, weaker profits and revenues.

RIM (TSX:RIM) fell $5.90 to $23.50. The information technology sector was the biggest decliner, down 5.25 per cent.

RIM's revenues fell 15 per cent to just under US$4.2 billion from $4.6 billion while profits dropped 58 per cent to $329 million from $797 million a year earlier.

"Overall there is a relatively negative note in the market and I would have to think that a large part of that is Research In Motion," said ScotiaMcLeod equity trading director Fred Ketchen.

The TSX had closed higher for the past three trading sessions. But it ended the week down 0.9 per cent from its level the previous Friday.

South of the border, however, stock markets finished their second-best week in a year as Europe's debt problems appear closer to a resolution.

Wall Street posted its fifth straight positive close in a row.

The Dow Jones added 75.91 points to 11,509.09 and the Nasdaq index gained 15.24 points to 2,622.31. The S&P 500 index was ahead 6.9 points to 1,216.01.

The loonie was up 0.52 of a cent to 102.15 cents US as gold made gains, but oil and copper prices sank.

Oil prices stepped back US$1.44 to US$87.96 a barrel. On the TSX, shares in Canadian Natural Resources (TSX:CNQ) fell three per cent or $1.02 to C$34.20.

Gold added $33.30 to $1,814.70 an ounce and shares in Barrick Gold Corp. (TSX:ABX) were up 47 cents to C$52.52.

Meanwhile copper prices shed three cents at US$3.93. Teck Resources Ltd. (TSX: TCK.B) saw its shares slip 2.3 per cent or 91 cents to C$39.10.

On Friday, the European Union's 27 countries overcame a year of infighting to agree Friday to tougher budget rules that make it easier to punish overspending governments, but failed to produce any new measures that might contain the debt market turmoil threatening it.

Top European Union officials rejected calls by Treasury Secretary Timothy Geithner to provide a decisive solution that would help Greece avoid a default on its debt.

Geithner's presence at the informal meeting -- the first time for an American Treasury chief -- was an indication of the international pressure building on European officials to fix their crisis and keep it from hurting the global economy.

The group's leader said Friday that it will not decide until next month whether Greece has qualified for its next round of bailout money.

Worries about a possible default by Greece have weighed on financial markets all summer. There are widespread concerns that that kind of financial shock might tip the global economy back into recession.

In the U.S., the Labour Department reported that unemployment rates rose in a majority of states in August for a third straight month, further proof that job growth is weak nationwide. The unemployment rates increased in 26 states. They fell in 12 and remained unchanged in 12.

But the Thomson Reuters/University of Michigan's consumer sentiment index showed U.S. consumers were slightly more confident in the economy in September, but are increasingly worried about the future. The index inched up to 57.8 in September from 55.7 in August, according to a Reuters report. The August reading was the lowest since November 2008. Friday's report is a preliminary reading.

In the sole piece of Canadian economic data Friday, Statistics Canada reported that non-resident investors resumed significant acquisitions of Canadian securities in July, adding $11.8 billion to their holdings, mainly in federal treasury bills.

Statistics Canada said Canadian holdings of foreign securities edged up $1.3 billion, led by further acquisitions of foreign corporate shares.

By contrast, U.S. data showed foreign holdings of U.S. Treasury securities dipped 0.4 per cent to $4.48 trillion in July. That matched the 0.4 per cent decline in April, which was the first decline in two years.

Another report from the U.S. Federal Reserve showed that Americans' wealth declined this spring for the first time in a year, as stocks and home values fell. At the same time, corporations increased the size of their cash stockpiles.

The combination could slow an already weak economy because it means businesses and consumers are spending less.

In Canadian corporate news, shares in First Uranium Corp. (TSX:FIU) plunged 16 per cent or 55 cents to 29.5 cents each after it warned it may have to take legal action against the South African government over the right to operate a mine waste project.

Note to readers: This is a corrected story. An earlier version had incorrect closing information for the S&P/TSX composite index.