Markets close higher on positive U.S. data - Aerospace shares suffer losses in wake of shuttle disaster

www.thestar.com Feb. 3, 2003. 06:17 PM

Jennifer Wells  Markets close higher on positive U.S. data Aerospace shares suffer losses in wake of shuttle disaster

Feb. 3, 2003. 06:17 PM MALCOLM MORRISON CANADIAN PRESS

Fresh hopes that the U.S. economy is on the mend sent stocks higher at the close today but buying was cautious ahead of when U.S. State Secretary Colin Powell address to the United Nations Wednesday about Iraq's weapons program.

Selling accelerated in the session's last hour, but the financial sector helped Toronto's S&P/TSX index to a 24.19-point gain at 6,593.68. Manulife Financial gained $1 to $35.99 and TD Bank added 82 cents to $33.

The TSX Venture Exchange rose 0.81 point to 1,117.96.

The Canadian dollar was up 0.20 cent at 65.92 cents (U.S.), a new seven-month closing high.

The Dow Jones industrial average retreated from a 99-point advance to end the day with a gain of 56.01 at 8,109.82.

The Nasdaq composite was ahead 2.88 points at 1,323.79 while the S&P 500 was up 4.62 at 860.32.

The Institute of Supply Management's index on the U.S. manufacturing sector came in at 53.9, down from 55.2 in December but higher than the expected reading of 53. An ISM index over 50 indicates expansion in the factory sector.

"I'd take today's report as another encouraging signal that manufacturing is turning the corner in the U.S.," said Doug Porter, senior economist with BMO Nesbitt Burns.

"This is a pretty important report because there had been some concern that business might be freezing up a bit ahead of a possible conflict with Iraq, and this report allays some of those fears and suggests the economy is still grinding forward."

The crash of the space shuttle Columbia weighed on aerospace stocks as investors worried that a suspension of the NASA program could hurt its prime contractors.

Boeing descended 48 cents to $31.11 (U.S.) and Lockheed Martin was down $1.50 to $49.55 (U.S.). Boeing and Lockheed are the program's principal contractors.

Alliant Tech Systems, which makes the shuttle's solid rocket boosters, fell $6.34 to $48.02 (U.S.).

In Toronto, shares of MacDonald, Dettwiler & Associates, responsible for the shuttle's Canadarm robotic arm, dropped 75 cents to $22.59.

The Toronto and New York markets observed two minutes of silence to remember the seven astronauts who died.

Some positive earnings news contributed to today's market upturn, as did a slippage in the price of crude oil as the strike in Venezuela eased.

However, as a mixed fourth-quarter earnings season nears its close under the shadow of war in Iraq, analysts say investors see little reason to commit themselves to stocks.

The energy sector in Toronto rose even as the price of crude in New York slipped 75 cents to $32.78 (U.S.) per barrel. Petro-Canada climbed 81 cents to $51.81.

The big oilpatch news came just after the market closed when Canadian Oil Sands announced it has struck a deal to buy 10 per cent of the Syncrude oilsands joint venture from EnCana for nearly $1.1 billion.

EnCana also gave Canadian Oil Sands an option to buy its remaining 3.75 per cent share of Syncrude for about $417 million. EnCana shares had ended the day up 20 cents at $48, while Canadian Oil Sands units were unchanged at $38.90.

The price of gold advanced $2.50 to $370.80 (U.S.) an ounce in New York.

Kinross Gold was off 50 cents to $10.51 on its first day of trading as a new entity. On Friday, shareholders of Echo Bay Mines and TVX Gold approved their merger with Kinross.

Other active Toronto stocks included Nortel Networks, ahead 10 cents to $3.70.

CAE Inc. lost 10 cents to $4.98 after it said it has sold two full flight simulators for $35 million, one to Air France and the other to China Eastern Airlines.

Bombardier gained 20 cents to $5.32 after it announced a $394-million order for 73 trains from the French National Railways.

Corel Corp. nearly tripled its loss to $27.8 million (U.S.) in the fourth quarter amid restructuring charges and asset writedowns. Shares in the software maker were off two cents at $1.23.

Biovail gained $1.28 to $44.88 after it announced positive results for its Metform GR medication for diabetics.

Stornoway Ventures and Northern Empire Minerals soared on Canada's junior stock exchange after discovering diamonds on Melville Peninsula in Nunavut.

Stornoway stock rocketed 64 cents to $1.06 on the TSX Venture Exchange, while Empire Minerals rose 60 cents to $1.10.

On the main TSX market, declines beat advances 546 to 515 with 237 unchanged.

Volume was 153.7 million shares worth $1.87 billion.

The Nasdaq Canada index slipped 0.40 point to 227.01.