03/16/2012 08:33 EDT | Updated 05/16/2012 05:12 EDT

TSX closes higher: oil prices up sharply, BCE plans to buy Astral Media

TORONTO - The Toronto stock market closed higher Friday amid rising resource stocks and a major acquisition in Canada's media sector.

Telecommunications company BCE Inc. (TSX:BCE) is buying Astral Media Inc. (TSX:ACM.A) in an agreement valued at $3.38 billion, including debt.

The S&P/TSX composite index gained 41.14 points to 12,496.96 while the TSX Venture Exchange added 4.66 points to 1,606.17.

BCE already has a huge footprint across the media landscape through its ownership of Bell Media, which includes the CTV television network and the former CHUM radio network.

This transaction will give it a further slate of media assets that include specialty channels, radio stations and billboards across the country.

"It continues a consolidation trend in the industry which, in our view, is part of a bigger trend to much increased merger and acquisition activity which is been fairly modest for the last couple of years," observed Bob Gorman, chief portfolio strategist at TD Waterhouse.

"But you have a number of factors that support more M&A activity on both sides of the border. You have large cash holdings at the corporate level, borrowing costs are very low and availability of credit, which is more of an issue in the U.S. than in Canada, is better."

The transaction is valued at $50 per share. Astral shares jumped $12.30 or 33.93 per cent to $48.55, while BCE shares dipped 42 cents to $39.64.

Shares in Corus Entertainment (TSX:CJR.B), a partner of Astral that also owns a variety of radio and TV properties, ran ahead $1.63 or 7.49 per cent to $23.40.

The Canadian dollar was up 0.03 of a cent to 100.82 cents US amid a weak manufacturing report for January.

A drop in production in the aerospace sector contributed to a drop in sales in January. Statistics Canada says those sales declined 0.9 per cent to $49.6 billion, which was the second decrease in seven months.

Excluding the aerospace industry, sales were virtually unchanged from December.

U.S. markets were mainly lower following data that showed a drop in consumer confidence.

The University of Michigan's confidence index declined in March for the first time since August, dipping to 74.3 in a preliminary reading from a final level of 75.3 for February.

The Dow industrials edged 20.14 points lower to 13,232.62. The Nasdaq composite index dipped 1.11 points to 3,055.26 and the S&P 500 index was ahead 1.57 points at 1,404.17.

The TSX base metals sector was ahead 0.59 per cent while copper prices shed early gains and closed down two cents to US$3.88 a pound.

Teck Resources (TSX:TCK.B) gained $1.21 to C$36.75 while First Quantum Minerals (TSX:FM) fell 35 cents to $19.76.

Oil prices were higher with the April crude contract in New York ahead $1.95 to US$107.06 a barrel.

The energy sector gained 0.72 per cent with Canadian Natural Resources (TSX:CNQ) ahead 70 cents to C$35.04 and Talisman Energy (TSX:TLM) improving by 21 cents to $13.42.

The financials sector was ahead 0.23 per cent with Scotiabank (TSX:BNS) up 51 cents to $55.86 while Sun Life Financial (TSX:SLF) ran ahead 38 cents to $23.44.

The gold sector was down about 0.5 per cent as bullion prices continued to weaken with the April contract down $3.70 to US$1,655.80 an ounce. Goldcorp Inc. (TSX:G) declined 46 cents to C$43.68.

Elsewhere on the economic front, the U.S. Federal Reserve said the output of the country’s factories rose 0.3 per cent last month. That followed even stronger increases in January and December, which combined for the best two-month stretch since 1998.

The government reported that a sharp jump in gas prices drove a measure of U.S. consumer costs higher in February. The U.S. Labour Department said the consumer price index rose 0.4 per cent in February, the largest increase in 10 months. Gas prices rose six per cent to account for most of the gain.

Market participants feel more confident that the U.S. economy is on a firmer footing, with that rising confidence reflected on New York markets where the Dow Jones industrials have bounded ahead more than eight per cent year to date.

But the Toronto market is largely based on the resource and financial sectors. And while financials have made gains for the year, the base metals sector is flat while the gold group is down sharply, leaving the TSX up about 4.5 per cent year to date.

The TSX ended this week down a handful of points, marking a third consecutive weekly drop, as investors took profits from a strong rally that started in October and started to stall three weeks ago.