Toronto stock market moves lower, commodity prices dip after big run-up

TORONTO – The Toronto stock market closed little changed Wednesday as commodity prices retraced some of the gains from the previous session while the market found some lift from the retail sector.

The S&P/TSX composite index slipped 8.05 points to 12,128.89 while the TSX Venture Exchange lost 10.47 points to 1,411.82.

Shares in Canada’s largest convenience store chain, Quebec-based Alimentation Couche-Tard Inc., (TSX:ATD.B), surged $5.30, or 15.45 per cent, to $39.60 as the company said it was buying a Scandinavian convenience and fuel retailer for $2.8 billion. Statoil Fuel & Retail is the top Scandinavian convenience and fuel retailer with about 2,300 full-service or automated stations.

The Canadian dollar erased early gains amid falling oil and copper prices, down 0.11 of a cent to 100.88 cents US following a surge of just under a cent Tuesday after the Bank of Canada hinted that higher rates could be on the way even as it left the current rate unchanged at one per cent.

U.S. markets also weakened with the Dow Jones industrial index down 82.79 points to 13,032.75.

The Nasdaq composite index fell 11.37 points to 3,031.45, and the S&P 500 index lost 5.64 points to 1,385.14.

Stock markets ran up sharply Tuesday in the wake of a successful Spanish bond auction and strong corporate earnings.

But expectations for this earnings season have been ratcheted much lower after three years of strong, double-digit gains.

“Analyst expectations had been lowered . . . in the way of profitability this year,” said Chris Kuflik, investment adviser with ScotiaMcLeod in Montreal.

“So far, the beat rate has been good but the bar has been set very, very low.”

After the close Tuesday, tech giants Intel, IBM and Yahoo all handed in results that beat earnings expectations.

Yahoo shares rose but Intel lost ground as it projected second-quarter gross margins below some estimates. IBM also pressured the market as it fell short on revenue targets.

Easing concerns about the European debt crisis and corporate earnings also boosted commodity prices across the board Tuesday.

But on Wednesday the May crude contract on the New York Mercantile Exchange fell $1.53 to US$102.67 a barrel, taking the energy sector down 0.56 per cent. Canadian Natural Resources (TSX:CNQ) gave back 45 cents to C$32.20.

Helping depress prices was data showing U.S. supplies grew more than expected last week. The Energy Information Administration reported that U.S. crude oil supplies grew by 3.9 million barrels, much higher than the 400,000-barrel rise that had been expected. The government’s weekly report also said that U.S. oil demand dropped 2.7 per cent while gasoline demand fell 2.8 per cent, compared with a year ago.

The gold sector was down about 0.85 per cent as bullion declined $11.50 to US$1,639.60 an ounce. Goldcorp Inc. (TSX:G) faded 83 cents to C$40.51.

Tech stocks added to weakness with Celestica Inc. (TSX:CLS) down 23 cents to $8.65 while Research In Motion Ltd. (TSX:RIM) lost 22 cents to $13.08.

The base metals sector was up 1.04 per cent even as copper prices dipped two cents to US$3.63 a pound, giving up Tuesday’s two-cent advance. Teck Resources (TSX:TCK.B) rose 37 cents to C$37.08.

Rio Tinto (NYSE:RIO) tightened its grip on Ivanhoe Mines Ltd. (TSX:IVN) under a new agreement and financing deal Wednesday that will see it nominate 11 of the company’s 13 board members. Chief executive and founder Robert Friedland has also resigned and stepped down from the board. Ivanhoe Mines (TSX:IVN) ran ahead $1.86, or 15.99 per cent, to $13.49.

The financial sector also provided lift, up 0.33 per cent while TD Bank (TSX:TD) gained 38 cents to $83.94.

Relief about Europe could be short-lived as Spain holds another auction Thursday to sell longer-term debt.

If it goes badly, investors will likely fret once again about the country’s ability to get a handle on its debts.

Spain has become the main source of concern in Europe’s debt crisis as investors worry about the government’s ability to push through a raft of austerity measures at a time when the economy is in recession.

The yield on the country’s 10-year bond on Monday spiked above six per cent, not far off the seven per cent rate that eventually forced Greece, Ireland and Portugal into seeking financial help from their partners in the eurozone.

In the past two days, however, it has edged back down to more manageable levels.

In other corporate news, grocer Metro Inc. (TSX:MRU) said second-quarter profit rose to $96.1 million or 94 cents per share, up 12 per cent from a year ago and two cents better than expectations. Sales improved four per cent to about $2.65 billion. Its shares were down 20 cents to $53.40.

Illinois-based SXC Health Solutions Corp. (TSX:SXC) is paying US$4.4 billion worth of cash and stock to acquire Catalyst Health Solutions Inc. (Nasdaq:CHSI) in a friendly deal between the two payment processors. SXC’s headquarters is in Lisle, Ill., but it has multiple locations in the United States and Canada. SXC shares ran ahead $9 or 11.3 per cent to $88.63.

Baytex Energy Corp. (TSX:BTE) has agreed to sell some of it light oil production assets for US$311 million to a subsidiary of Magnum Hunter Resources. The sale represents 40 per cent of the Calgary-based company’s U.S. production. Baytex shares slipped nine cents to $49.15.