TSX lower on weak metals: gold down 4.5 per cent; N.Y. stocks flat

stock trader talks on the phone next to a colleague in front of the German stock index (DAX) display that is dropping at the Stock exchange in Frankfurt, Germany, Wednesday. THE ASSOCIATED PRESS/Bernd Kammerer

TORONTO - Tumbling oil and metals prices sent the Toronto stock market down sharply Wednesday morning amid worries about the effect of an American economic slowdown on demand.

U.S. indexes were little changed after Tuesday's surge that followed aggressive interest rate easing by the U.S. Federal Reserve and decent earnings reports from investment banks Lehman Bros. and Goldman Sachs.

Traders were encouraged Wednesday morning by another better than expected report, from Morgan Stanley.
Toronto's S&P/TSX composite index stepped back 116.36 points to 13,020.34 at midmorning, eroding a good chunk of Tuesday's 184.55-point advance.

The TSX Venture Exchange moved 28.50 points lower to 2,527.72 while the Canadian dollar moved down 0.41 cent to 100.27 cents US.

Statistics Canada reported sales by wholesalers rose a healthy 2.6 per cent in January to $44.1 billion, offsetting a 2.6 per cent drop in December.

New York's Dow Jones industrials declined 21.49 points to 12,371.17 after the Fed interest rate cut of three-quarters of a point helped push the blue chip index up 420 points in the previous session.

The Nasdaq composite index was off 0.86 of a point to 2,267.40. The S&P 500 index headed 3.03 points higher to 1,333.77 after Morgan Stanley reported a quarterly profit of US$1.55 billion or $1.45 per share, down from $2.67 billion a year ago but well ahead of the $1.03 per share that analysts had expected. Morgan Stanley shares rose $3.33 to US$46.19.

Visa Inc. launched the largest initial public offering in U.S. history, selling 406 million shares at US$44 each to raise US$17.9 billion. The world's biggest credit card processor is not a lender and thus not directly exposed to shaky debt markets, and the stock leaped to $65 in early trading.

Investors were also heartened by U.S. government moves to free up billions of dollars at mortgage companies Fannie Mae and Freddie Mac, to help hard-pressed homeowners refinance mortgages.

On the TSX, the gold sector was down over four per cent as the April bullion contract on the Nymex slumped $47 to US$957.30 an ounce. Barrick Gold Corp. (TSX:ABX) faded $2.28 to $47 and Kinross Gold Corp. (TSX:K) fell $1.52 to $22.63.

The TSX base metals sector weakened 3.5 per cent as prices fell for aluminum, platinum, palladium and copper. Teck Cominco Ltd. (TSX:TCK.B) moved down $2.31 to $39.04.Denison Mines Corp. (TSX:DML) swung to a profit of US$23.5 million in the fourth quarter, up from a loss of $2.4 million, as revenue rose to $36.8 million from $8.3 million. Its shares moved down 60 cents to $7.81.

Toronto's financial sector improved 1.5 per cent. Bank of Montreal (TSX:BMO) gained 73 cents to $42.62 while CIBC (TSX:CM) advanced $1.47 to $62.22.

The energy sector moved down 1.7 per cent as the April oil contract on the New York Mercantile Exchange dropped $3.40 to US$106.02 a barrel, ahead of data expected to show another rise in American crude inventories. Suncor Energy (TSX:SU) gave back $2.59 to $100.33 and Petro-Canada (TSX:PCA) retreated 93 cents to $44.79.
Mega Brands Inc. (TSX:MB) shares were down 19 cents to $3.75 on word of a $30-million charge largely related to recent toy recalls.

The Brick Group Income Fund (TSX:BRK.UN) had its best-ever fourth-quarter net earnings of $22.6 million, up 54.5 per cent over the furniture retailer's holiday quarter of 2006. Its units rose 25 cents to $8.

On overseas equity markets, Japan's Nikkei average followed Wall Street higher, gaining 2.5 per cent, while Hong Kong's Hang Seng index rose 2.3 per cent.

European markets were flat, reviving from losses earlier in the session before the Morgan Stanley report. London's FTSE 100 was off 2.8 points to 5,603, while Germany's DAX dipped 3.58 points to 6,389.81 and the Paris CAC-40 added 3.13 points to 4,585.72.