TSX closes higher amid major energy acquisition, positive economic data

TORONTO – Major acquisition activity in the Canadian oilpatch helped push the Toronto stock market higher Wednesday.

The S&P/TSX composite index closed up 53.55 points to 12,461.24 amid rising copper and gold prices and mixed earnings reports, while traders digested a 178-point surge Tuesday. The TSX Venture Exchange rose 4.22 points to 1,304.

The energy sector led advancers after Celtic Exploration Ltd. (TSX:CLT) received a friendly takeover offer valued at $3.1 billion from Canadian affiliates of U.S. energy giant Exxon Mobil Corp. (NYSE:XOM). The Calgary-based company is mainly focused on natural gas areas in British Columbia and Alberta.

Celtic’s shareholders are being offered $24.50 per share and a half-share of a new company, code-named Spinco. Celtic shares surged 45 per cent to $26.29.

And Penn West Petroleum Ltd. (TSX:PWT) has agreed in principle to sell $1.3-billion worth of its non-core properties, representing the equivalent of 12,000 barrels per day of production. Details weren’t disclosed and its shares gained 19 cents to $13.85.

The Canadian dollar more than clawed back Tuesday’s slide of almost three-quarters of a US cent, up 0.91 of a cent to 102.25 cents US, amid higher copper prices and positive U.S. economic data. The loonie fell 0.7 of a cent Tuesday in the wake of a speech by Bank of Canada governor Mark Carney, which traders interpreted as containing a more dovish tone toward the possibility of hiking rates.

The bank makes its next announcement on interest rates next Tuesday.

U.S. markets were generally weak following earnings disappointments from tech bellwethers IBM and Intel and data that provided a further indication that the housing sector recovery is strengthening.

The Dow Jones industrials were up 5.22 points to 13,557. The Nasdaq composite index rose 2.95 points to 3,104.12 and the S&P 500 added 5.99 points to 1,460.91.

The U.S. Commerce Department said Wednesday that builders broke ground on homes at a seasonally-adjusted annual rate of 872,000 in September, an increase of 15 per cent from the August level.

Applications for building permits, a good sign of future construction, jumped nearly 12 per cent to an annual rate of 894,000, also the highest since July 2008.

“The reality is the economic data coming out of the United States has been quite encouraging, such as the housing starts today,” said Norman Raschkowan, North American strategist Mackenzie Financial Corp.

“It seems that North America is in reasonably good shape and the positive tone to the North American economy is providing some underlying support to the equity markets.”

Intel beat expectations for the third quarter, handing in third-quarter net income of $2.97 billion, or 58 cents per share after the close Tuesday, down from $3.47 billion, or 65 cents per share, a year ago. Excluding one time items, earnings came in at 60 cents, beating estimates of 50 cents.

But it added that the usual bounce in sales due to the holiday season is likely to be cut in half this year as consumers shift from PCs to tablets, which don’t use Intel processors and its shares slid 56 cents to $21.79.

IBM said its third-quarter earnings remained unchanged from a year ago despite an unexpected charge and a steeper drop in revenue than analysts anticipated. IBM Corp. earned $3.8 billion, or $3.33 per share, in the July-September period. The company delivered the same net income a year ago, but its per-share earnings were 14 cents lower last year because the company had more outstanding stock then. IBM shares dropped $4.97 or 10.48 per cent to $200.52.

Bank of America fared better as it narrowly turned a profit of US$340 million in the latest quarter, which works out to a fraction of a penny per share. Financial analysts expected an 11-cent loss. Its shares drifted between positive and negative territory during the session and closed two cents lower to US$9.44.

Oil prices closed little changed after the U.S. Energy Information Administration reported a bigger than expected rise in crude supplies last week. The November crude contract on the New York Mercantile Exchange inched up three cents to US$92.12 a barrel as data showed that crude supplies rose by 2.9 million barrels, against an expected rise of 1.5 million barrels.

Other energy sector gainers included Birchcliff Energy (TSX:BIR), up 64 cents to C$8.73 while Paramount Resources (TSX:POU) improved by $2.11 to $33.70.

The base metals sector was a major gainer, up 1.4 per cent while December copper was up five cents at US$3.75 a pound. Major Drilling Group International (TSX:MDI) advanced 46 cents to $11.28 while Teck Resources (TSX:TCK.B) edged up 35 cents to C$31.44.

The gold sector was slightly higher while December gold added $6.70 to US$1,753 an ounce. Eldorado Gold (TSX:ELD) gained 25 cents to C$14.52.

Industrials led decliners with Canadian National Railways (TSX:CNR) down $1.10 to $87.67.

PotashCorp (TSX:POT) shares added two cents to $41.12 even as it warned that its profit this year will fall short of expectations following delays in reaching contracts with fertilizer buyers in China and India. It says that earnings for the full 2012 financial year will fall below even the lowest previous estimate of $2.80 to $3.20 per share.

Commodity prices could be impacted by the release Wednesday night of the latest growth data for China. The consensus view of economists is that the data is expected to show third-quarter growth in the world’s second-biggest economy eased to 7.4 per cent from a year earlier, down from 7.6 per cent in the prior quarter.