TSX down amid fiscal cliff fears, Greek debt deal relief, record Bombardier sale

TORONTO – The Toronto stock market closed lower Tuesday as positive economic data was trumped by growing uncertainty surrounding negotiations aimed at steering the U.S. economy away from a fiscal crisis at the end of next month.

The S&P/TSX composite index moved 73.42 points lower to 12,111.63.

The TSX Venture Exchange was down 19.58 points to 1,206.17.

The Canadian dollar declined 0.09 of a cent to 100.53 cents US.

U.S. indexes were also lacklustre despite a string of positive data and relief that eurozone officials have agreed on getting the next instalment of crucial bailout money to Greece.

The Dow Jones industrials gave back 89.24 points to 12,878.13 with fiscal cliff worries picking up during the afternoon after Senate Majority leader Harry Reid lamented there has been “little progress” made in talks about resolving the imposition of tax increases and spending cuts at the end of the year.

The Nasdaq composite index was down 8.99 points at 2,967.79 and the S&P 500 index fell 7.35 points at 1,398.94.

Economists say the combination of tax increases and spending cuts would represent a shock sufficient to send the U.S. back into recession.

“Overall, people are just risk averse — until we get some sort of a deal it’s probably going to stay this way,” said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.

“The longer we wait, the more uncertainty this means. Businesses clamp down, they don’t expand, they don’t hire.”

The U.S. Commerce Department says that orders for core capital goods, which are considered a proxy for business investment, rose 1.7 per cent in October, the largest amount in five months. Orders in this category had slowed beginning in the spring, acting as a drag on overall economic growth.

Total orders for durable goods were unchanged in October against a 0.4 per cent drop that economists had expected.

Also, there was more evidence of a housing recovery as Standard & Poor’s/Case-Shiller reported that home prices increased in September in most major U.S. cities.

And U.S. consumer confidence rose this month to its highest level in almost five years, pushed up by steady improvement in hiring. The Conference Board says its consumer confidence index rose to 73.7 in November from 73.1 in October. Both are the best readings since February 2008.

The gold sector was down about 2.4 cent as commodities shed early gains and the December bullion contract on the New York Mercantile Exchange declined $7.30 to US$1,742.30 an ounce. Goldcorp Inc. (TSX:G) faded $1.83 to C$38.95 while Agnico Eagle Mines (TSX:AEM) fell $1.87 to $55.02.

The energy sector was down 1.05 per cent as the January crude contract on the New York Mercantile Exchange moved down 56 cents to US$87.18 a barrel. Talisman Energy (TSX:TLM) slipped 17 cents to C$11.48 and Canadian Natural Resources (TSX:CNQ) was 46 cents lower to $27.92.

The mining sector was off 0.76 per cent with December copper unchanged at US$3.54 a pound. First Quantum Minerals (TSX:FM) declined 32 cents to C$21.14 and Major Drilling Group (TSX:MDI) fell 36 cents to $9 as the company reported lower earnings and revenue for the latest quarter. It also noted that “many mining companies did not extend their activities beyond their original budgets.” It also warned of weakness in the third quarter, which is seasonally the weakest of the year.

Weakness was offset somewhat by a gain of eight per cent in Bombardier Inc. (TSX:BBD.B) shares to $3.37.

The transport giant announced what it calls the biggest sale of business aircraft in its history — a firm order by charter company VistaJet for 56 Bombardier Global jets valued at $3.1 billion along with options for 86 others. The deal could potentially be worth up to $7.8 billion if all options are exercised.

Meanwhile, Research in Motion Ltd. (TSX:RIM) (NASDAQ:RIMM) stock moved down 10 per cent to $10.70 on heavy volume of 104 million shares after soaring more than 25 per cent over the previous six sessions. The latest smartphone sales data from Kantar Worldpanel ComTech showed BlackBerry market share in the U.S. has fallen to 1.6 per cent in the 12-week period ending Oct. 28, compared to 8.5 per cent in the three-months ended last October.

RIM had found lift from a variety of analyst upgrades amid optimism about the launch of its new BlackBerry 10 operating system, which will be unveiled at a Jan. 30 event along with its new line of smartphones. It’s viewed as a make-or-break product launch for Research In Motion.

Meanwhile, after three weeks of negotiations, Greece’s euro partners and the International Monetary Fund agreed early Tuesday to release loan payments totalling €44 billion and introduce a series of measures designed to reduce the country’s massive debts to a more manageable level within a decade. These include reducing the interest rates Greece has to pay on the loans and a still-vague bond buyback program.

Without the bailout money, the country would be facing bankruptcy together with a possible exit from the 17-country eurozone, with potentially chaotic repercussions for the world economy.

Traders also digested a new forecast warning the world’s economic recovery will be “hesitant and uneven” next year. The Organization for Economic Co-operation and Development adds that the 17-country eurozone is expected to struggle further next year despite recent positive steps to stabilize its government debt crisis.

It forecasts a 0.4 per cent contraction this year in the eurozone and a 0.1 per cent fall next year.

Elsewhere, the OECD is predicting the U.S. economy will grow two per cent next year while Canada’s economy will grow by 1.5 per cent in the final three months of this year, and advance only 1.8 per cent in 2013. The global economy is expected to grow 3.4 per cent next year.