BUSINESS

TSX stalls after string of gains, CRTC turns thumbs down on BCE's Astral buy

10/18/2012 08:30 EDT | Updated 12/18/2012 05:12 EST
TORONTO - The Toronto stock market closed little changed Thursday following three days of advances as economic growth data from China met expectations and traders looked to a two-day summit of European Union leaders.

Traders also took in news after the close of a major setback for BCE Inc. (TSX:BCE).

The federal broadcast regulator has unconditionally rejected the telecom’s $3.4-billion takeover of Astral Media, saying the controversial deal would have placed too much power in the hands of one company and threatened the competitive media landscape in Canada. The announcement came out after the close. BCE shares had closed up 15 cents to $43.63 while Astal shares had declined $1.44 to $47.

The S&P/TSX composite index edged up 4.87 points to 12,466.12 after netting more than 250 points since Friday. The TSX Venture Exchange added 8.34 points to 1,312.34.

The Canadian dollar came off Wednesday's surge of almost a full cent, down 0.72 of a cent at 101.53 cents US.

Google Inc. was also in focus, with its stock plunging eight per cent after its third-quarter earnings report was mistakenly released early. Google said it earned $2.18 billion, or $6.53 per share, during the three months ending in September. That compared with net income of $2.73 billion, or $8.33 per share, last year.

Excluding one time items, earnings would have been $9.03 per share, missing expectations of $10.63 a share. Google shares were halted mid-afternoon to give traders a chance to digest the numbers and resumed trading about half an hour before the close.

New York markets were weak amid mixed economic data and poorly-received earnings reports from investment bank Morgan Stanley and mobile phone maker Nokia.

The Dow Jones industrials slipped 8.06 points to 13,548.94 as applications for U.S. unemployment benefits jumped 46,000 last week to a seasonally-adjusted 388,000, the highest in four months. The four-week average of applications, a less volatile measure, fell slightly to 365,500, a level consistent with modest hiring.

The slide in Google shares helped push the Nasdaq composite index down 31.25 points at 3,072.87 while the S&P 500 index was off 3.57 points to 1,457.34.

In other economic news, the U.S. Conference Board said its index of leading indicators, pointing to future economic trends, rose 0.6 per cent in September after falling 0.4 per cent in August and rising 0.4 per cent in July. The strength in September came from a big jump in applications for building permits, which the government reported Wednesday had climbed to a four-year high that month.

"Net/net I think you’re getting good news out of the economic data, stocks are generally going towards a more positive seasonal phase of the year which is usually November through December," said Sid Mokhtari, market technician at CIBC World Markets.

"And China came right on consensus."

Commodity prices failed to find lift from data showing that China’s economy grew 7.4 per cent from the year before in the three months ended in September, which was in line with economists’ expectations. That was slower than the second quarter’s 7.6 per cent growth but economists also pointed to quarter-on-quarter growth of 2.2 per cent, the biggest such gain in a year.

While indicating that the world’s second-biggest economy is recovering, analysts said the showing also indicated that there is no need for the government to inject further stimulus.

The mining sector led advancers even as December copper moved one cent lower at US$3.74 a pound following a five cent run-up Wednesday. The group was up 0.8 per cent and Teck Resources (TSX:TCK.B) climbed 61 cents to C$32.05 and Thompson Creek Metals (TSX:TCM) ran up 13 cents to $2.91.

The November crude contract on the New York Mercantile Exchange slipped two cents to US$92.10 a barrel. EnCana Corp. (TSX:ECA) gained 86 cents to C$23.64 and Suncor Energy (TSX:SU) rose 22 cents to $33.82 as the energy sector drifted 0.51 per cent higher.

The financial sector was up 0.75 per cent as Manulife Financial (TSX:MFC) advanced 16 cents to $12.54 while Royal Bank (TSX:RY) climbed 56 cents to $58.75.

The gold sector lost almost about 2.5 per cent as December bullion pulled back $8.30 to US$1,744.70 an ounce. Barrick Gold Corp. (TSX:ABX) faded 76 cents to C$38.37.

Meanwhile, an EU summit that started Thursday is seeing leaders debate tightening financial integration and creating a banking union as well as dealing with the financial needs of Greece and Spain.

Ahead of the meeting, German Chancellor Angela Merkel endorsed a proposal for a top European Union official to be given the power to veto member governments’ budgets in a bid to keep European countries from overspending in the future.

On the earnings front, Morgan Stanley reported higher net income and revenue for the third quarter. Excluding an accounting charge, the bank earned $535 million for common shareholders in July to September, up from $39 million a year ago. Revenue rose 18 per cent to $7.5 billion after excluding the charge, which beat the $6.4 billion that analysts expected. Its shares were down 70 cents to US$17.79 after running up 22 per cent year to date prior to the release of the results.

Nokia Corp. said Thursday that its third-quarter net loss widened to €969 million as revenue plunged 19 per cent and sales of its flagship Windows Phone fell under three million units. Investors had been expecting an even bigger drop in sales and its shares eased 14 cents to US$2.80.

In other corporate developments, Telus Corp. will have a single class of shares after shareholders voted strongly in favour of the plan on Wednesday, defeating a U.S. hedge fund’s attempt to get a premium for holders of the company’s voting shares. Telus voting shares (TSX:T) gained 19 cents to $63.08 while its non-voting shares (TSX:T.A) gained 27 cents to $62.55.