BUSINESS

TSX lower amid central bank stimulus hopes, traders look to key Fed meeting

08/27/2012 08:26 EDT | Updated 10/27/2012 05:12 EDT
TORONTO - Mining stocks led the way to a lower close on the Toronto stock market Monday, with buyers inclined to do little ahead of a major U.S. Federal Reserve meeting at the end of the week.

The S&P/TSX composite index declined 33.41 points to 12,048.82 while the TSX Venture Exchange was off 5.06 points at 1,246.82.

The Canadian dollar rose 0.08 of a cent to 100.93 cents US.

U.S. markets were mixed with the Dow Jones industrials down 33.3 points at 13,124.67.

The Nasdaq composite index added 3.4 points to 3,073.19, benefiting from a 1.9 per cent rise in Apple's share value.

On Friday, a federal jury in California found that some of Samsung’s products illegally copied features and designs from Apple’s iPhone and iPad and ordered the South Korean concern to pay more than $1 billion in damages. Samsung Electronics shares fell 7.5 per cent in Korean trading.

The S&P 500 index slipped 0.69 of a point to 1,410.44.

Central bankers will be in focus later in the week as the U.S. Federal Reserve holds its annual retreat in Jackson Hole, Wyo. Fed chairman Ben Bernanke delivers a keynote speech Friday while European Central Bank president Mario Draghi speaks on Saturday.

Expectations for more stimulus grew after the Wall Street Journal reported Friday that Bernanke had written a Republican lawmaker saying there was room for the central bank to do more to help the recovery.

Hopes for central bank stimulus have supported gains this month after Draghi said Aug. 2 that the ECB was prepared to do whatever was necessary to keep the euro currency union intact.

"What’s driving markets is this whole hope for stimulus, because really there’s been nothing but a spate of OK news, but not great news," said John Stephenson, portfolio manager at First Asset Funds Inc., adding there will be disappointment if central bankers don’t deliver.

"If you think people have run the market up in the hope of stimulus, you’re going to be hoping they don’t disappoint otherwise you could see a relatively unpleasant selloff occur."

There were also hopes that the Chinese government is ready to boost the world’s second-biggest economy after Premier Wen Jiabao called for efforts to stabilize weakening exports.

The report from the official Xinhua news agency gave no indication of possible measures but Beijing previously has promised tax cuts and loans by state banks to help struggling exporters.

Export growth in July fell to just one per cent, well below forecasts, from the previous month’s 11.3 per cent growth due to weak demand in debt-crippled Europe, China’s biggest export market, and the United States, which is struggling with a sluggish recovery.

On the TSX, the base metals sector was down almost one per cent as September copper shed an early advance to close down one cent at US$3.48 a pound. Capstone Mining (TSX:CS) dropped eight cents to $2.54 while Lundin Mining (TSX:LUN) eased 10 cents to $4.52.

The gold sector slipped about 1.5 per cent as December bullion gained $2.70 to US$1,675.60 an ounce. Goldcorp Inc. (TSX:G) dipped 49 cents to C$39.58.

The energy sector edged 0.1 per cent lower with the October crude contract on the New York Mercantile Exchange down 68 cents to US$95.47 a barrel. Oil prices had been higher earlier Monday but backed off on increased speculation that the U.S. will release oil from reserves to ease the commodity's rising cost.

Forecasts for tropical storm Isaac also moderated, easing concerns that the storm would damage key oil and gas operations in the Gulf of Mexico. The U.S. government says 78 per cent of the oil production in the Gulf of Mexico has been halted in preparation for Isaac.

Canadian Natural Resources (TSX:CNQ) declined 38 cents to C$30.68.

Financials gave some lift to the TSX a day before the big banks start delivering quarterly earnings reports. Two of the banks report on Tuesday. Scotiabank (TSX:BNS) was 48 cents higher to $52.94 while Bank of Montreal (TSX:BMO) added eight cents to $57.70.

Telecoms also provided lift with Telus Corp. (TSX:T) ahead 27 cents to $64.27.

Rogers Communications (TSX:RCI.B) was ahead seven cents to $40.15 after it said it is buying sports broadcaster Score Media Inc. (TSX:SCR) in a transaction valued at $167 million, or $1.62 per share.

Shares of Score Media jumped nearly 47 per cent Friday following reports that the specialty TV sports broadcaster was in discussions to be purchased by Rogers. Score stock was up a further 18 cents or 11.69 per cent to $1.72 Monday.

In other acquisition activity, Canadian uranium giant Cameco (TSX:CCO) has purchased one of Australia’s largest undeveloped uranium deposits. Cameco is paying BHP Billiton US$430 million for the Yeelirrie uranium project. Cameco shares were down 23 cents to C$22.23.

Rental car company Hertz is buying its rival, Dollar Thrifty Automotive Group Inc., for approximately $2.3 billion, giving it more ways to attract business and leisure travellers and an expanded international presence. Hertz Global Holdings jumped 8.06 per cent to US$14.21.