Stock markets flat as US troops position themselves for invasion of Iraq

www.canada.com MALCOLM MORRISON
Canadian Press Wednesday, March 19, 2003

TORONTO (CP) - Stock markets were close to the unchanged mark Wednesday morning hours before a U.S. invasion of Iraq is likely to begin.

The countdown to an attack continued as long columns of U.S. troops, armoured vehicles and trucks advanced through swirling sand in the Kuwaiti desert toward the Iraqi border, positioning themselves to invade on short notice.

Toronto's S&P/TSX composite index moved 13.35 points higher to 6,451.96 after closing up 31.98 points.

The Canadian dollar lost territory as the American currency continued to strengthen, losing 0.19 cent to 67.63 cents US.

The euro was quoted at $1.0598 US, down from $1.0621 Tuesday.

The loonie had climbed 0.26 cent Tuesday after Bank of Canada governor David Dodge reiterated in a speech in Rome that more interest rate hikes will be needed to get Canada's inflation back down to the central bank's targets.

New York's Dow Jones industrial average rose 0.91 of a point to 8,195.14 after advancing 52.31 points Tuesday, moving up a total of 669 points in the past five sessions.

The Nasdaq lost 8.92 points to 1,391.63 after edging 8.28 points higher on Tuesday while the S&P 500 was flat at 866.45.

In corporate news, trading in chemical company DuPont Canada was halted on news that its U.S. parent is offering $1.4 billion Cdn to privatize it. Dupont Canada's shares closed Tuesday at $17.24.

Shares in DuPont and Co. were 20 cents lower at $39.88 US.

Softness on the Nasdaq came after software maker Oracle Corp. reported a cautious outlook for a recovery in technology spending late Tuesday.

The company posted a 12 per cent rise in fiscal third-quarter profit and said revenue grew modestly, helped by growth in sales of software upgrades to existing customers.

But the company said revenue from new software licences and sales of its flagship database product line each fell four per cent. Its shares were down 60 cents to $11.65 US.

Generally, stock markets have been driven higher since the middle of last week as investors look to the rally that followed the start of the 1991 Persian Gulf war and hope history repeats itself.

"There's a hope that a swift victory will create a perverse twist in Wall Street theory: Sell on the rumour and buy on the fact," said market commentator Bryan Piskorowski of Prudential Securities Inc. in New York.

But there's plenty of reasons for caution, including the possibility of torched oil fields, use of biological weapons and terrorist attacks.

Overseas, Tokyo's 225-issue Nikkei Stock Average rose 96.58 points, or 1.21 per cent, to close at 8,051.04, led by key exporters including automaker Honda and technology issues Nikon and Sony.

Hong Kong shares enjoyed a second consecutive day of gains, with some traders placing bets ahead of several key earnings announcements. The Hang Seng Index climbed 117.08 points, or 1.29 per cent, to 9,158.59.

London's FTSE 100 index rose 49.1 points or 1.3 per cent to 3,796.4 in mid-afternoon trading, Frankfurt's DAX added 1.55 per cent and Paris's CAC 40 rose two per cent.

Crude oil prices were on the way up with Brent crude futures in London up 48 cents to $27.73 US a barrel while futures in New York advanced 24 cents to $31.91 US.

On Tuesday, prices in New York plunged $3.25 in the biggest one-day drop in almost a year.

While U.S. crude inventories remain uncomfortably low, OPEC producers other than Iraq and strife-torn Venezuela have been increasing production for weeks. Much of that oil is now in storage or in tankers on the high seas, say oil analysts.

Saudi Arabia is believed to have as much as 50 million barrels in storage in the country and more en route to other storage facilities. That's enough to replace Iraq's 1.5 million to two million barrels a day for about a month.

Gold moved lower with the price of the metal slipping $1.70 to $335.50 US an ounce.

In other corporate news, Transat A.T. Inc., a major travel company and operator of Air Transat, slashed first-quarter losses as revenue jumped 20 per cent from a year earlier. Losses came in at $7 million, down from a $17-million loss a year earlier.

Air Canada has drafted a plan to cut $200 million in labour costs by closing two call centres, cutting 30 per cent of the jobs in the remaining centres and slashing some employee wages by 27 per cent.