Wednesday, July 12, 2006, 4:15 PM EST (Thomson Financial Corporate
Services): Settling down after its triple-digit surge yesterday on stable
interest rate news, the TSX had a quiet afternoon after rumors emerged of
the acquisition of media giant CHUM by Bell Globemedia. This offset early
surges in gold and oil. Bombardier and Microsoft fell on legal woes. Two
mergers in the energy sector are being closely watched, and trade surplus
figures were released.
* The S&P/TSX Stock Exchange Composite Index slipped 21.91 points, or
0.19%.
* In the energy sector of Calgary, Petro-Canada increased its hostile
bid for Canada Southern Petroleum to US $13 per share in cash, trumping the
friendly offer of US $11.10 from Canadian Oil Sands Trust. Canada Southern
Petroleum is the owner of carried interests in two Arctic natural gas
patches, which would save partners from upfront development costs. Canada
Oil Sands, on the other hand, is actually trying to use its bid as a hedge
to obtain gas to use in its oil sands operations; it has a 35% stake in
Syncrude Canada.
* Phelps Dodge cleared a hurdle in the worldwide race for Falconbridge,
as the U.S. Dept. of Justice and the FTC granted early termination of its
waiting period under an anti-trust act, indicating it found no problems
with the Inco / Falconbridge acquisition. Meanwhile, rival Xstrata reacted
with indignation to Phelps Dodge's statements on Tuesday and staunchly
denied plans of a stealth takeover, and Teck Cominco resumed its hostile
takeover bid. The stakes rose for all involved as the nickel market peaked
in the London markets today to an all-time high; the increase of over 90%
this year is attributed mainly to burgeoning construction since it is a
main component of stainless steel.
* Bombardier Inc.'s rail division is being sued for C $41 million by
the London Underground for alleged design problems in a train that was
involved in a 2003 Tube accident that injured 32 passengers. Bombardier did
not build the train, but the German-made cars were running in 2001, when it
joined the private sector five-member Metronet consortium that maintains
the trains and track over most of the system. The consortium has been
plagued with legal problems and cost overruns, most recently having to pay
a US $5 million fine in May for failing to modernize 36 Tube stations.
* Legal trouble is brewing south of the border as well, as the NY stock
market slipped, partly on news that Microsoft is being fined US $357
million by the EU for breaking anti-trust rules. The Europeans had found
Microsoft guilty of not sharing technical details of Windows with its
rivals, and to provide better documentation for it; Microsoft claimed that
the instructions for the new manuals were too vague and intends to appeal.
This news, along with higher crude oil prices and mixed earnings reports,
dropped the Dow by three digits on Wednesday.
* As nuclear talks with Iran ran into difficulties in Brussels,
violence brewed in Lebanon, and mixed news was generated by the U.S. weekly
oil inventory, August crude oil rose US $0.79 to close at $74.95 / barrel.
* The effects of the Mumbai bomb blast were still being felt on the
yellow metal market, but more slowly than yesterday, as gold rose again by
1.26% to end the day at US $651.20.
* On the economic front, statistics Canada released the May merchandise
trade surplus figures today, revealing an increase to C $4.1 billion, well
above the revised C $3.9 billion April numbers. However, analysts had been
predicting $4.5 billion.
* U.S. May trade deficit figures revealed an increase of 0.8% to US
$63.8 billion, up from the revised $63.3 billion April figure. The price of
crude has leapt US $4.92 from April to May, the biggest jump since 1990.
Exports rose 2.4%, and imports 1.8%, both also recent records. Analysts do
not see the trade deficit dropping soon as oil stays around US $75 per
barrel.
-- Carolyn.Crapo@contractor.Thomson.com; Thomson Financial Corporate
Services
This is Thomson Financial Corporate Services Canadian Commentary, which
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accurate, we take no responsibility for inaccurate information and reserve
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SOURCE Thomson Financial Corporate Group
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