TSX little changed amid mixed economic data, uncertainty over fiscal cliff talks

TORONTO – North American stock markets were flat late morning Friday amid a mixed bag of economic data while traders also waited for further word on how U.S. budget negotiations are progressing.

The S&P/TSX composite index gained 5.28 points to 12,208.13 while the TSX Venture Exchange added 0.55 of a point to 1,218.93.

Many investors are monitoring comments from Democrat and Republican leaders as they wrangle over ways to avoid steep spending cuts and significant tax increases that will kick in automatically in January if the there’s no deal.

“No one is wanting to step in and take a position ahead of seeing if there’s a resolution with the fiscal cliff,” said Jennifer Dowty, portfolio manager at Manulife Asset Management.

“In order to get the markets moving, we need to see a fiscal cliff resolution. Until that time, the markets, I think, are just going to lack momentum and continue to trade sideways.”

The Canadian dollar was down 0.16 of a cent to 100.57 cents US as the economy stalled out during September. Statistics Canada reported there was no growth in gross domestic product during that month September following a 0.1 per cent dip during August.

That translated into third quarter economic growth of 0.6 per cent on an annualized basis, versus expectations of 0.8 per cent growth.

The agency said the disappointing performance reflected exports which fell two per cent in the third quarter.

New York markets were little changed amid a mixed bag of economic data.

The Dow Jones industrials slipped 2.06 points to 13,019.76, after a government report showed that consumers cut back on spending last month with no growth in personal income.

Consumer spending dropped 0.2 per cent in October. That’s down from an increase of 0.8 per cent in September and the weakest showing since May.

Like previous economic reports, the Commerce Department’s consumer spending report was skewed by Superstorm Sandy which struck the northeast coast.

That report was tempered by a positive reading of the manufacturing sector in the American Midwest. The Chicago Purchasing Managers Index for November moved into expansion territory, rising to 50.4 from 49.9 in October.

Other data showed eurozone unemployment at a record high.

The Nasdaq was off 6.61 points to 3,005.42, while the S&P 500 index edged 1.37 points lower to 1,414.58.

Markets closed higher Thursday at the end of a volatile session as top Republicans and Democrats offered differing views on what’s holding up a deal to avoid a fiscal cliff at the end of the year.

Economists believe that the combination of spending cuts and tax increases would take a big bite out of economic growth and likely send the U.S. economy back into recession.

U.S. Treasury Secretary Timothy Geithner presented a proposal to congressional leaders Thursday calling for US$1.6 trillion in higher taxes over 10 years. The proposal includes plans for legislation in 2013 aimed at saving $400 billion over 10 years from Medicare and other benefit programs.

Another feature in the Geithner plan is a call for increasing the nation’s debt limit without the need for congressional approval.

The TSX mining sector moved up 0.4 per cent while March copper gained one cent to US$3.60 a pound. Inmet Mining (TSX:IMN) climbed $1.82 to $67.32.

Industrials provided lift as Bombardier Inc. (TSX:BBD.B) ran up seven cents to $3.47.

The January crude contract on the New York Mercantile Exchange gained 46 cents to US$88.53 a barrel and the energy sector was slightly higher. Canadian Natural Resources (TSX:CNQ) climbed 17 cents to $28.71.

Cenovus Energy (TSX:CVE) shares were up seven cents to $33.14 while Environment Minister Peter Kent refused to approve an Alberta gas project planned by the Calgary-based company. The proposal involves a project in the CFB Suffield national wildlife area. Kent says the gas project would put wildlife at risk and he had to turn it down.

The telecom sector rose 0.3 per cent with Rogers Communications (TSX:RCI.B) ahead 25 cents to $43.90.

Telus Corp. (TSX:T) shares rose 34 cents to $64.91 as it said the non-Canadian ownership of its common shares is down, leading it to suggest that Mason Capital may have reduced its stake in the company. Telus has been embroiled in a fight with the U.S. hedge fund over a plan to convert the telecommunication company’s non-voting shares into voting shares.

The gold sector led decliners, down 0.4 per cent with February bullion off $8.40 to US$1,721.10. Kinross Gold Corp. (TSX:K) faded 13 cents to $10.06.

European markets were higher amid data showing unemployment in the 17 EU countries that use the euro rose to a new record high of 11.7 per cent in October.

While the rise in the jobless rate was largely anticipated, it highlights the dire state of the currency bloc’s economy.

London’s FTSE 100 was ahead 0.21 per cent, Frankfurt’s DAX was up 0.17 per cent while the Paris CAC 40 gained 0.12 per cent.