Tuesday, June 27, 2006, 4:15 PM EST (Thomson Financial Corporate
Services): After its M&A-fueled triple-digit rise on Monday, the TSX moved
lower today, as the U.S. posted mixed economic news and telecommunications
giant Nortel declared that it would cut over a thousand jobs. In sector
movement, gold, material, mining and technology shares were decidedly
lower. Otherwise, the markets in Toronto and worldwide were hushed,
awaiting the meeting of the US Federal Reserve later this week.
* The S&P/TSX Stock Exchange Composite Index fell 78.30 points, or
0.69%.
* Topping corporate headlines, Nortel Networks Corporation is planning
to reduce its workforce worldwide by 1900 people, while creating about 800
jobs at operations centers (mostly in Mexico and Turkey). Battered by the
bursting of the tech bubble, its own bookkeeping scandals in 2003, and
major M&A activity in recent weeks among its competitors, the company is
also restructuring its pension and health plans, all in an attempt to save
US $175 million by 2008.
* About 375 more job cuts will be made by Nova Chemicals Corp., as it
restructures to align resources and cut costs. In addition to the cuts,
which should save C $65 million a year, Nova will spin off a unit called
Styrenix for its styrene plastics production. Its stock edged upwards at
the news.
* Oil edged upwards, closing the day at nearly US $72. Meanwhile,
oilfields services company Saxon Energy said that it was purchasing Kinnell
Drilling Ltd and Kinnell Resource Consultants for C $61.5 million. The
senior management of drilling contractor Kinnell is joining Saxon to help
manage the merged businesses, and the move will expand Saxon's total drill
rigs in Canada to nine, making a total of 29 working rigs in North America.
* There was also good news involving drilling for Niko Resources: it
made a major deepwater discovery off the east coast of India in the D6
block, with positive results for oil and gas in its first Cretaceous test.
The successful completion of the new well, at a depth of over 3,500 meters,
bolstered the firm's shares.
* The gold sector moved lower, as gold fell US $3.30 to US $584.40,
after a morning surge to almost US $599. Gold miner Miramar was very active
in the markets with a volume of over four million.
* Elsewhere in the yellow metal markets, Bema Gold Corp. teamed up with
the Arizona Star Resource Corp. to purchase the Barrick Gold Corp.'s 51%
stake in Compania Minera Casale, owner of the Aldebaran property in
northern Chile. This includes the Cerra Casale, one of the world's largest
undeveloped gold and copper deposits. Bema and Arizona Star will give US
$10 million when a decision is cleared by the Chilean government to sink a
mineshaft, and then further payments in ounces of gold or cash as the
digging continues.
* In U.S. economic headlines, the Consumer Confidence Index topped
predictions south of the border, rising to 105.7 in June, according to the
Conference Board. The May reading had been revised upward to 104.7 from
103.5. The latest result beat analysts' predictions of 103.5. The Board's
estimates are considered longer-term and less affected by increases in fuel
costs than the University of Michigan's consumer sentiment reports.
* Finally, sales of existing homes in the U.S. in May dropped 1.2% to a
seasonally adjusted annual rate of 6.67 million units, the steepest decline
since January, according to the National Association of Realtors. The
latest figure was below the 7.14 million posted a year ago. The drop is
very regionalized and was expected as part of an overall softening of the
US housing market; higher interest rates are resulting in a slowing rate
and a small oversupply of new homes.
-- Carolyn.Crapo@contractor.Thomson.com; Thomson Financial Corporate
Services
This is Thomson Financial Corporate Services Canadian Commentary, which
is updated twice daily. The information herein is believed to be true and
accurate, we take no responsibility for inaccurate information and reserve
the right to update our reports. For more financial information at your
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SOURCE Thomson Financial Corporate Group
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