Mining SectorMining sector leads losers on TSX; BMO stock declines on Q1 restatement
5/17/2007 9:17:00 AM
TORONTO (CP) - The Toronto stock market was down Thursday morning with losses limited by rising energy stocks, while Bank of Montreal's (TSX:BMO) shares fell after it announced it will restate its first-quarter earnings because of higher losses from natural gas trading.
Investors also took in higher-than-expected core inflation in Canada during April.
Shares in Bank of Montreal recovered somewhat during the morning but was down 86 cents to $68.84 after going as low as $68.35. It said gas trading losses ballooned to $680 million from the previously estimated $350 million to $450 million.
"They seem to have kept some of the hedges ... in place and maybe that's what caused the additional losses," said John Kinsey, portfolio manager at Caldwell Securities.
"Normally, something of this sort, they tend to cut and run a bit. Here they may have said, well maybe we can get back a little of this if we just hang on. And that I don't think is the way you should be playing it."
The commodity-trading losses were disclosed April 27, but deeper problems have been uncovered since then as the valuations of positions have been brought into line with current market values.
The latest numbers will cut 64 cents a share from earnings, compared with the previous estimate of 45 to 55 cents, to be recognized in the first and second quarters.
Other bank stocks were little changed.
New York markets stepped back, with investors nibbling at profits after a strong runup Wednesday that sent the blue-chip index into fresh record territory while data showed a drop in a gauge of future economic growth.
Toronto's S&P/TSX composite index moved down 15.79 points to 14,009.74.
The Canadian dollar rose 0.52 of a cent to 91.11 cents US as Statistics Canada reported that easing gasoline prices slowed Canada's annual inflation rate to 2.2 per cent in April, from 2.3 per cent the previous month. But the core rate, which the Bank of Canada also watches closely when it sets interest rates, came in at 2.3 per cent.
Other data showed that surging demand for automotive products boosted wholesale sales by 1.9 per cent, to $44.1 billion in March, following a one per cent rise the previous month. The back-to-back monthly increases helped push up sales in the first quarter by 3.4 per cent over the previous quarter. Statistics Canada said it was the best quarterly gain in three years.
The TSX Venture Exchange was off 19.18 points to 3,223.79.
On Wall Street, the Dow Jones industrials gave back 7.47 points to 13,480.06. The Nasdaq composite index declined 5.7 points to 2,541.72 and the S&P 500 index lost 1.6 points to 1,512.54.
A closely watched gauge of future U.S. economic activity fell in April, nearly reversing the previous month's gain.
The Conference Board said Thursday its index of leading economic indicators dropped 0.5 per cent, a worse reading than the unchanged reading that had been expected.
Recent sessions have seen traders grow more confident that a cooling economy will lead the U.S. Federal Reserve to change its stance on interest rates. The Fed left rates unchanged at its last five meetings after 17 straight increases that began in 2004, and the market is increasingly betting on a rate cut later this year.
The TSX mining sector was down 2.2 per cent as Equinox Minerals (TSX:EQN) declined nine cents to $2.57 and Teck Cominco Ltd. (TSX:TCK.B) dropped $1.12 to $43.88.