Canadian Issues Rally On Broad Market Strength

Canadian Issues Rally On Broad Market Strength Friday, January 14, 2005, 4:15 PM EST (Thomson Financial Corporate Group): Toronto issues received support from most major sectors, particularly financial, technology, staple, material and mining stocks. In major corporate reports, Molson and Adolph Coors have sweetened their deal for the second time. U.S. tech firms posted disappointing financial reports, but also some witnessed upbeat brokerage coverage. Also, U.S. economic data eased inflationary concerns. U.S. markets will be closed Monday for Martin Luther King Jr. Day. * The S&P/Toronto Stock Exchange Composite Index surged 48.02 points, or 0.53%. * Within the staple group, Molson Inc. and Adolph Coors again sweetened their proposed deal for Molson shareholders. The firms agreed to increase the special dividend to holders of Molson class A non-voting shares to C$5.44 a share, from a prior offer of C$3.26 a share. The total value of the new dividend is C$640 million, up from the previous C$381 million. * Industrial shares surged. Canadian National Railway reached a tentative labour agreement with the United Steelworkers of America. Also, Boeing said it will end production of the 717 aircraft. Some traders believe the move may result in Boeing working with Bombardier and its C-Series aircraft, while eliminating some competition. Bombardier advanced on the session. * Technology shares strongly rebounded from yesterday's weakness. South of the border, Sun Microsystems posted a second-quarter net profit of a penny a share, reversing a year-earlier loss of US$0.04 a share. However, revenues fell slightly and missed the mean Street expectation. * In the U.S. chip space, Cree posted a higher fiscal second-quarter profit that met analyst expectations, but its revenue figure disappointed. Cree also anticipates its current-quarter results missing the mean Street forecast. Elsewhere, Applied Materials said it is cutting up to 240 jobs but will try to place as many affected workers as possible in new positions. UBS started coverage on the stock at "buy." That brokerage also upgraded Flextronics International to "buy" from "neutral." Meanwhile, Celestica found buyer support. * In cyclical news, Corus Entertainment rallied, after National Bank and BMO upgraded the stock. Shortly before the closing bell yesterday, that firm posted a surge in its first-quarter profit, aided by cost controls that overshadowed lower revenues. Today, Corus' president and CEO said the firm is seeking television acquisitions "in excess" of C$1 billion. * Gold shares and the yellow metal ebbed, as the greenback moved higher against the euro. Comments from President Bush regarding U.S. government support of a "strong dollar policy," and its commitment to reducing the U.S. deficit, boosted the currency. Also, Saint Louis Federal Reserve President William Poole indicated the Fed may abandon its "measured pace" approach to interest rates, leaving some to speculate the Fed may raise rates at a faster pace. In corporate reports, Goldcorp's board and special committee urged shareholders to wait for the special committee's review of Glamis Gold's unsolicited bid and the board's response before they respond to the Glamis offer. Goldcorp's board still believes that shareholders should approve Goldcorp's friendly offer to buy Wheaton River Minerals. Meanwhile, oil prices built on recent gains, as a cold snap is expected to hit the U.S. northeast. * Elsewhere in resources, the government of Eritrea is lifting a four- month halt on exploration work by international mining firms. Nevsun Resources and Sunridge Gold Corp. are among those firms that may resume working there. Turning to research notes, CSFB upgraded Teck Cominco to "outperform" from "neutral" and downgraded Fording Canadian Coal to "neutral" from "outperform." Separately, Deutsche Bank raised its rating on Barrick Gold Corp. to "buy." * Turning to financial releases from the healthcare sector, Dimethaid Research said that its second-quarter net loss widened to C$7.3 million, or C$0.11 a share, from C$6.2 million, or C$0.14 a share, a year earlier. * On the economic front, new auto sales declined 3.1% to a seasonally adjusted 131,978 in November from 136,231 in October. Economists were looking for a steeper fall of 3.6% in the November reading. South of the border, the producer price index fell 0.7% in December, while the core index rose 0.1%. Economists had forecast a 0.2% decrease in the overall index and a 0.2% gain in core prices. Industrial production rose 0.8% in December, while capacity use advanced to 79.2%. Both figures exceeded economist forecasts. -- Linda.Shea@thomson.com; Thomson Financial Corporate Group This is Thomson Financial Corporate Group's 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 fingertips, please visit www.irchannel.com. If you have any questions please e-mail James Sang at james.sang@tfn.com or call 646.822.6233 For more information about Thomson Financial visit us on-line at http://www.thomsonfinancial.com/. PRNewswire -- Jan. 14 Source: Thomson Financial Corporate Group Web site: http://www.thomsonfinancial.com/ ------- Profile: International Entertainment