Toronto stock market little changed following steep loss, oil prices rise

TORONTO - The Toronto stock market was little changed Thursday with investors disinclined to do much ahead of the release of the U.S. government's employment report for May on Friday.

The S&P/TSX closed 8.38 points lower to 13,519.5 after initially trading up almost 100 points as investors tentatively bought up stocks beaten down in the course of 275-point plunge Wednesday.

The TSX Venture Exchange was off 9.23 points to 2,058.19, while the Canadian dollar moved lower, up 0.01 of a cent to 102.5 cents U.S.

The industrials sector was the biggest gainer thanks to railway stocks. Canadian National Railway Co. (TSX:CNR) gained $1.16 at $74.42 while Canadian Pacific Railway Ltd. (TSX:CP) was up 75 cents at $60.69.

The energy sector was flat even as oil prices edged higher with the July contract on the New York Mercantile Exchange up 11 cents to US$100.40. Prices had been under pressure after the U.S. Energy Department said crude inventories rose 2.8 million barrels last week against expectations of a decline of 1.6 million barrels. Imperial Oil (TSX:IMO) shed 85 cents to $45.81.

Progress Energy Resources Corp. (TSX:PRQ) shares jumped 59 cents to $14.57 after the company struck a $1.1-billion deal to form a strategic partnership with the Malaysian national oil company to develop the Canadian company’s B.C. natural gas assets.

Base metal prices further weakened with the July copper contract down two cents to US$4.08 a pound. A sharp drop in China's main purchasing managers index helped send copper down seven cents Wednesday. China is the world's biggest consumer of the metal.

On Thursday, the sector rose 0.25 per cent with Teck Resources (TSX:TCK.B) up 42 cents to $49.36 while Inmet Mining (TSX:IMN) climbed $2.44 to $71.18.

Precious metal prices moved lower with the August gold contract in New York down $10.50 to US$1,532.70 an ounce. The gold sector was the biggest TSX decliner. Goldcorp Inc. (TSX:G) lost 56 cents to C$47.58 and Barrick Gold Corp. (TSX:ABX) was off 99 cents to $45.06.

New York markets were mainly lower following big losses Wednesday, which were triggered by a disappointing report from the ADP payrolls firm. The showing greatly reduced expectations for strong job growth in the U.S. government's non-farm payrolls report on Friday.

Also, a weak manufacturing report from the Institute for Supply Management showed the sector still expanding, but at a much slower pace.

The two reports intensified worries that the U.S. economy was slowing faster than expected.

"Today is really a stabilization from the dramatic move yesterday," said Paul Taylor, chief investment officer for BMO Harris Private Banking.

"And really there is kind of a pall (overhanging markets) and that is we're waiting to see if in fact the extent the weak ISM manufacturing and employment data yesterday were predictive of a weak employment report tomorrow."

The Dow Jones industrial average was down 41.59 points to 12,248.55.

The Nasdaq composite index gained 4.12 points to 2,773.31 while the S&P 500 index was down 1.61 points to 1,312.94.

Further discouraging investors were moves by Moody's Investors Service.

The ratings agency said Thursday that the U.S. government's debt rating outlook depends on the outcome on negotiations for debt reductions. Moody’s said it may place the rating on review for a downgrade if there is no progress in increasing the debt ceiling in the coming weeks.

Moody's also said that it was reviewing the ratings of Bank of America Corp. Citigroup Inc. and Wells Fargo & Co. for possible downgrades. The three banks' current ratings have been boosted from Moody’s assumption the federal government would prevent them from failing in a crisis. Moody's said Thursday that this "too big to fail" assumption may no longer be true.

Meanwhile, fast-growing daily deal site Groupon Inc. on Thursday filed go public on the New York Stock Exchange, the first step what will be one of the year’s most hotly anticipated initial public offerings. Groupon estimated it would raise US$750 million from new investors when it goes public.

In earnings news, Laurentian Bank of Canada (TSX:LB) shares shed $2.09 to $49.56 even as the bank said it is raising its quarterly dividend by eight per cent following increased profit and revenue. The Montreal-based bank said its second-quarter net income was $30.1 million or $1.13 a share, up from $28.3 million or $1.06 per share a year earlier.

Descartes Systems Group (TSX:DSG) handed in first quarter earnings of $2.2 million or three cents a diluted share, up from $200,000 or less than one cent a share a year ago. Revenue at the Waterloo, Ont.-based company ran up 27 per cent to US$27.1 million. Its shares gained 15 cents to $6.75.

Magellan Aerospace Corp. (TSX:MAL) earned $7.2 million or 14 cents per share in the first quarter with $170.5 million of revenue. Its shares slipped three cents to $4.87.

ATS Automation Tooling Systems Inc. (TSX:ATA) shares gained 29 cents to $7.10 even as the company booked a $15.7 million loss in its fourth quarter of 2011, saying it suffered from poor performance at its Photowatt solar energy division. The results at the southwestern Ontario-based maker of machinery and equipment for industrial and automotive markets compared to a profit of $2.1 million a year earlier.

In other corporate developments, shares of Sino-Forest Corp. (TSX:TRE) were down more than 20 per cent Thursday before shares were halted from trading after a damning analyst report that rated the company a “strong sell.” Shares in the company which owns and manages tree plantations in China, sells standing timber and wood logs, and makes engineered-wood products, last traded at $14.46, down $3.75.