TORONTO - The Toronto Stock Exchange finished Wednesday in positive territory but near its lowest level of the day, as investors speculated about what mixed forecasts from major U.S. companies will mean for the economy.
The S&P/TSX composite index was up 48.9 points at 12,579.61. It had posted triple-digit gains to break through the 12,710 mark in early trading, but saw a sharp decline around noon, when Wall Street swung into the red.
As the Toronto market closed, firm Wi-LAN Inc. (TSX:WIN) announced a $480-million unsolicited cash takeover offer for Mosaid Technologies Inc. (TSX:MSD) in a deal that would combine Canada's two leading patent firms.
Wi-LAN's offer of $38 per Mosaid share is a premium of about 31 per cent.
Wall Street ended the session little changed as the Dow and S&P indexes rebounded to close slightly higher just before close.
The Dow Jones industrial average added 4.28 points to 11,410.21. The S&P 500 eked out 1.12 points to 1,193.88. But the Nasdaq composite index lost 11.97 points to 2,511.48, with computer giant Dell Inc. contributing to much of the decline on a weak revenue forecast.
"There are a whole bunch of contradictory signals in the system now, and it's hard to tell which way to go," said Charlie Smith, chief investment officer of Fort Pitt Capital Group.
Target Corp., Staples Inc. and Dell Inc. all reported earnings for last quarter that were above analysts' forecasts. But economic growth is weak around the world, and some economists worry that another recession may be coming. That could pull down future results.
Target and Staples both gave profit forecasts that were above Wall Street's expectations, but Dell cut its prediction for revenue growth this year.
The Canadian dollar was up 0.25 of a cent at 102.07 cents US as the greenback fell against other currencies. The lower American dollar pushed commodity prices higher since most are sold in U.S. currency.
Crude oil prices were up 93 cents to US$87.58 a barrel on the New York Mercantile Exchange after a report on U.S. crude inventories gave ambiguous signs about the strength of consumer demand. On the TSX, the energy index was up 0.05 per cent with shares in Encana Corp. (TSX:ECA) gaining one per cent or 27 cents to $25.26.
Gold rose $8.80 to US$1,793.80 per ounce — a record high close — while copper prices gained four cents to $4.03 per pound. The mining sector led the index higher with a 0.88 per cent increase and shares in miner HudBay Minerals Inc. (TSX:HBM) rose 21 cents to $12.33.
Traders, torn between a largely positive corporate earnings season and a weakening economy, have been conflicted about whether to be confident enough to invest. That has created stock market havoc.
Markets have been particularly volatile since the beginning of the month when the credit agency Standard & Poor's announced it was downgrading the U.S. debt status from the coveted AAA rating for the first time in history.
"The biggest worry remains the lack of economic growth in Europe," said Michael Hewson of CMC Markets.
The leaders of France and Germany said Wednesday that they want the heads of the eurozone countries to elect the president of a new "economic government" who would direct regular summits to respond to the continent's financial crisis.
"There was no talk about boosting the EFSF (European Financial Stability Facility) and no talk about eurobonds, all rather disappointing but not altogether surprising, given the political obstacles against them," Hewson said.
The proposal fell short of what markets had hoped for: a grand plan to save the euro and, in particular, a sign the eurozone was moving toward a single bond issued by the 17 countries.
In Canada, Statistics Canada says foreigners reduced their holdings of Canadian securities by about $3.5 billion in June, all of it in debt instruments, reversing a trend of several months. Canadian investment in foreign securities slowed to $343 million in June.
ATS Automation Tooling Systems Inc. (TSX:ATA) swung to a first-quarter loss of $5 million from a profit of $5.2 million a year ago, as it books losses from its discontinued operations. Revenues increased to $126.9 million from $101.8 million. Shares lost 4.4 per cent or 30 cents to $6.58.
Paladin Labs Inc. (TSX:PLB) announced Wednesday that it plans to acquire Labopharm Inc. (TSX:DDS) in a friendly deal that values the fellow Quebec company at more than $20 million. Paladin has agreed to buy all the shares of the Laval-based Labopharm for just over 28.5 cents per share in cash.
Labopharm stock rose 62 per cent, or 10.5 cents to 27.5 cents on the Toronto Stock Exchange.
And U.S. chipmaker Microsemi Corp. (Nasdaq:MSCC) officially launched a hostile, US$548.7-million takeover bid for Ottawa-based Zarlink Semiconductor Inc. (TSX:ZL). Zarlink shares rose 8.5 per cent or 28 cents to $3.59.