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.

news.ft.com By Nerma Jelacic in London Published: February 3 2003 12:11 | Last Updated: February 3 2003 17:22

Platinum hit a 23-year high on Monday buoyed by speculative and fund buying while supply fears continued to support the precious metal.

The commodity, used in autocatalysts and jewellery, has risen about 14 per cent so far this year as the demand remained high.

Last week platinum was boosted further by George W Bush's State of the Union speech in which the US president called for greater research into fuel-cell technology, which relies on platinum.

But the biggest catalyst for platinum's rise has been fear of supply shortage amid possibility of industrial action at Russia's Norilsk Nickel, the world's fifth-largest producer of the metal.

At 1720 GMT platinum was trading at $697 an ounce having earlier hit a high of $701 an ounce - its highest level since March 1980.

But analysts were unsure about the metal's ability to sustain the recent gains. "Platinum looks increasingly vulnerable to a pull back after the recent rally. At the margin dollar weakness will help... but to a lesser degree than has been apparent in the gold market," said Andy Maag, precious metals analyst with UBS Warburg.

Gold remained near its six-year highs in quiet trade as investors looked ahead to US Secretary of State Colin Powell's visit to the UN Security Council on Wednesday in which he is expected to offer proof that Iraq has not disarmed.

The commodity was trading at $370.40 an ounce in late afternoon trade in London off its high of $371.60 an ounce. Investors were also put off the precious metal by a rally in the US dollar.

The currency rose to its best level this year against the yen and also pushed the euro lower ahead of the release of some key economic data later on Monday.

"The closer we are getting to the testimony of Colin Powell the more reluctant speculators will be in taking positions. The euro will dictate the market within this range," said Mr Maag.

Brent crude prices fell on Monday after the Venezuelan opposition declared an end to the 63-day general strike that has crippled oil production in the world's fifth largest exporter.

Brent crude for March delivery was 42 cents lower at $30.68 per barrel off the previous session's fix of $31.10 per barrel.

But there was uncertainty surrounding the declaration after executives said stoppages will continue in the oil industry. Exports from the South American country have increased in recent weeks as supporters of president Chavez worked to keep the country's oil terminals open but exports remain at about half of the pre-strike levels.

Comments from oil ministers at Opec's oil conference over the weekend added pressure on the commodity. Ministers expressed their concern that the oil market could become oversupplied adding that Venezuela's return to full-scale production could see 4m barrels per day or more floating.

www.atimes.com By Abhrajit Gangopadhyay BANGALORE - All roads in Mumbai, the commercial capital of India, these days lead to Zaveri Bazaar, where office orderlies rub shoulders with software professionals in the long queues lined up to sell their gold holdings for record prices at the jewelry stores massed in the market. People are selling off their heirloom gold ornaments - traditionally cherished among Indians - and coins as war fears in the Middle East have propelled gold prices to new heights over the past few weeks. Expat Indians are also pumping in forex exchange and converting part of their asset holdings into gold as they seek a safer haven for savings. The London-based Gold Fields Mineral Services (GFMS) an independent consulting company, forecasts that the price of gold will stay above US$370 per ounce (where it has been for the past weeks) if the US-Iraq crisis develops into a long war. And as has already happened, the high gold price will affect demand for gold jewelry in price-sensitive markets such as India. In its latest survey, GFMS said, "If the Iraqi crisis blows up into a lengthy war, we could easily see the market at over $370. There is a possibility of gold jewelry demand picking up in India in the first half of 2003, provided prices ease below $340, and only in comparison to a poor first half of last year." The $370 level for gold was last seen in March 1996. Investors are diverting their funds to precious metals not only on war fears, but also because of sliding equity markets and the weakness of the dollar in forex markets. "If we don't see prices easing back to more like $330 and, instead, they hold at over $350, we could easily see fabrication during the first half of 2003 slumping below last year's low levels," GFMS said in the survey. GFMS added that total gold fabrication had declined by over 10 percent during 2002, mainly as the price rise led to a slump in jewelry manufacture in markets such as West Asia and India. The price of gold has risen 25 percent in the past year. Mirroring gold in its rise is platinum. Prices for the metal rose to a 17-year high last week. Concerns over a supply disruption from Russia and South Africa, the two largest producers of the metal, had led the price rally. In India, the sharp rise in scrap supply and zooming global prices have severely crimped Indian gold imports during the current high-demand marriage season, which started last week. Jewelers are buying old ornaments at a discount to current prices and recycling them, instead of using new gold bars, traders said. Imports account for more than two-thirds of Indian gold consumption, the largest in the world, and these are declined with the rise in price. Daily gold imports into Jaipur, a leading bullion trading center in the country, are expected to slip to just 100 bars (of 116.64 grams each) - from about 500 bars in recent weeks. Jaipur usually imports an average of 3,000 bars a day. Jewelry sales down Sales of gold jewelry, which account for 85 percent of Indian gold demand, have fallen sharply due to volatile prices, traders say. However, compulsory buying, such as for weddings, will continue to take place despite volatile prices, traders said. Gold jewelery is an essential part of Hindu marriages, when parents gift it to their daughters for financial security. The wedding season begins in mid-January and ends in March. Domestic gold sales for July-September - the latest figures available - fell 8.5 percent year-on-year to 116.4 tonnes. Imports fell 12.3 percent to 87 tonnes, according to the World Trade Council. Driven by fears that a war in Iraq may force them to repatriate, Indians based in the Gulf are sending their money home, swelling foreign exchange reserves to record levels and shoring up rupee sentiment. India's forex reserves, the world's seventh-largest at $73.2 billion and equivalent to 14 months of imports, could top $80 billion by March, analysts said. Gold reserves are $3.444 billion. For overseas Indians, their banking system offers a safer refuge than the Gulf, even though India suffers from its own problems with political risk. More than 3 million of India's 20 million overseas population work in the Gulf and interest rate differentials of nearly 200 to 250 basis points between the rupee and foreign currency deposits were an added attraction, traders said. The record reserves have encouraged global rating agency Moody's to declare that it may raise the country's forex debt rating from "Ba2" in February. Such an upgrade would further boost inflows from expatriates and foreign investors buying Indian assets, traders said. Overseas workers also draw comfort from India's dismantling of some its archaic capital controls, making forex repatriation easier. Rising rupee Expatriates' remittances and rising trade inflows helped the partially convertible rupee to rise 0.55 percent against the US dollar in 2002, its first annual gain in more than a decade, and 2.3 percent to 47.94/95 from its all-time low in mid-May. Data from the Reserve Bank of India shows that expatriates' deposits rose nearly $1.6 billion to $26.73 billion in the first six months of the current year to March. In the December quarter, deposits may have grown by $1 billion to $1.5 billion after an aggressive rate cut by the US Fed Reserve in November, traders estimate. Their remittances are expected to exceed another $1.5 billion before the financial year ends in March. Traders said that the large unhedged positions of Indian companies that raised forex loans could pose a problem if there were a sudden reversal in sentiment on the rupee, or a war broke out in the Gulf and sent oil prices soaring. Also, importers are loathe to hedge their requirements because of a weakening dollar and the comfortable external position, including a current account surplus of $1.34 billion in the July-September quarter - the third straight quarter of surplus. India imports 70 percent of its crude oil requirements, which form two-thirds of the annual import bill of nearly $60 billion. Oil has stayed above $30 a barrel in recent weeks due to fears of a US-led war in Iraq and a strike in Venezuela. "We could see an outflow of $8 billion to $10 billion in a matter of weeks as importers will rush to cover and the effects of the relaxed capital controls are seen," said a treasury head at one leading private sector bank. (©2003 Asia Times Online Co, Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)

www.forbes.com Reuters, 02.03.03, 4:47 AM ET

LONDON, Feb 3 (Reuters) - European blue chips sprinted higher on Monday morning, with UK insurers such as Aviva <AV.L> and Prudential <PRU.L> leading the charge after news the UK's financial watchdog will consider easing solvency rules. Ericsson <ERICb.ST>, the world largest mobile networks maker, dropped sharply after reporting a wider-than-expected fourth-quarter loss and issuing a gloomy outlook. Investors also picked through results from Europe's biggest biotech, Serono <SEOZ.VX>. The stock was 0.75 percent higher after the Swiss group gave an upbeat forecast. "Wall Street's gains and the dollar's small recovery over the weekend should help stock markets," said Gert de Mesure, head of equity strategy at Delta Lloyd Securities in Antwerp. The dollar <EUR=> hit a one-and-a-half week high against the euro. At 0934 GMT, the FTSE Eurotop 300 index <.FTEU3> of pan-European blue chips was 1.51 percent firmer at 809 points while the narrower DJ Euro Stoxx 50 index <.STOXX50E> was 0.99 percent stronger at 2,270 points. The Eurotop 300 <.FTEU3> benchmark, coming on the back of three straight years of losses, ended January more than seven percent down -- its worst start to the year since the index's records begin in 1986. Some strategists were sceptical that Monday's rebound will continue given worries over a possible war in Iraq and a fragile macro-economic background. "Military action looks inevitable now within the next six to eight weeks. This means that stocks will remain at an impasse until then, especially while there are precious few signs of any real economic recovery anywhere in the United States or Europe," said David Brown, chief European economist at Bear Stearns. U.S. stock futures were higher, boding well for Wall Street's open. In New York the Dow Jones industrial average <.DJI> closed up 1.4 percent on Friday and the tech-laden Nasdaq Composite <.IXIC> ended 0.11 percent lower. The FTSE 100 <.FTSE> index of British shares was a standout gainer amongst national bourses, up 2.5 percent. "The UK equity market has been a conspicuous underperformer year to date. Aside from Venezuela and Indonesia, it is the worst performer among the 48 countries within the FTSE world index," said Ian Scott, European strategist at Lehman Brothers. "The common factor is a sustained attempt by UK institutional investors to reduce their exposure to equities ....however it does seem as if this process is much closer to the end than the beginning." Insurers were leading the way in the UK after Britain's finance watchdog said on Friday it would consider granting waivers to life insurers to prevent them having to sell equities over fears they may risk breaching solvency margins amid tumbling global stock markets. Royal & Sun <RSA.L> rose 8.3 percent, Aviva <AV.L> gained 7.9 percent, Prudential <PRU.L> jumped 7.2 percent, Britannic <BRT.L> was up 7.6 percent and Friends Provident <FP.L> gained 6.2 percent.

CHEMICAL REACTION Celanese <CZZG.DE> was 11.5 percent firmer at 20.30 euros, reacting to a Financial Times Deutschland report saying a financial investor plans to buy the German chemicals maker, offering 27 euros per each Celanese share. "Financial buyers have been very active in the sector during the past three to five years as chemical stocks are good for cash generation and restructuring opportunities," said one chemicals analyst in London. France's Rhodia <RHA.PA>, which has long been viewed as a potential bid target in the chemicals sector was 4.3 percent firmer. Merger and acquisition speculation also stirred up Trinity Mirror <TNI.L>, one of Britain's largest regional newspaper publishers. Sources said the group has discussed a 1.3 billion pound takeover approach with two venture capital firms. Trinity Mirror rose 6.6 percent.

www.forbes.com Reuters, 02.03.03, 1:52 AM ET By Raju Gopalakrishnan

SINGAPORE, Feb 3 (Reuters) - Speculation about the new Bank of Japan governor briefly took the dollar to a six-week high against the yen on Monday and Tokyo stocks closed almost two percent higher while much of the rest of Asia remained on holiday. With no major new development on the Iraq crisis, economic factors were driving most markets. However, prices were kept in check because the threat of war had not receded. The dollar reached a high of about 120.30 yen on speculation that policy dove Nobuyuki Nakahara would be chosen as the new central bank governor. Nakahara has advocated aggressive credit easing by the central bank, promoting a weaker yen. But the greenback fell back to 120.12 yen after Prime Minister Junichiro Koizumi denied the reports. U.S. Treasuries, which would gain from a rise in the dollar, were softer in Asia because of war concerns, however. Oil prices slipped as Venezuelan oil exports continued to recover, while OPEC ministers warned of a possible glut in supplies in the second quarter. U.S. light crude for March delivery traded 30 cents lower at $33.21 a barrel but the threat of war in Iraq, the world's eighth-biggest oil exporter, continued to keep prices well supported. "War is still very much on the cards and that is likely to counter any downward pressure on prices from Venezuela coming back to work," said David Thurtell, commodities strategist at Commonwealth Bank in Sydney. Spot gold <XAU=> was last quoted at $371.50 per ounce, ticking higher on the threat of war and sending spot platinum to a 23-year high of about $682 per ounce. Markets were closed in China, Hong Kong, Singapore, Malaysia and Taiwan for Chinese New Year. In Tokyo, Japanese stocks opened subdued but ticked up as the yen weakened, raising prospects for exporters. At the close the Nikkei <.N225> was 1.93 percent higher at 8,500.79 points, off a high of 8,511.87 points. Analysts said that the destruction of the space shuttle Columbia was unlikely to have much of an impact on Wall Street and that that had also helped sentiment somewhat. "People were not sure how to assess the incident. But now that Globex (Nasdaq futures <0#ND:>) showed a strong footing, we can say that Wall Street will take it in its stride," said Kazunori Jinnai, general manager at Daiwa Securities SMBC's equity department. In Australia, stocks were pegged back by war jitters. The benchmark S&P/ASX 200 index <.AXJO> eased 0.5 percent to 2,942.6 points by the close. "There's no reason to step up at this stage, with uncertainty hanging over the market," said Ruppen Margarian, equities dealer at ING Investment Management. "People are waiting for a raft of reporting, we've got some economics out this week and, most importantly, (U.S. Secretary of State Colin) Powell going to the U.N.," Margarian said. Powell has promised to present evidence of Iraq's weapons programme to the U.N. Security Council on February 5 as the United States and Britain lobby world leaders for a final U.N. resolution on disarming Iraq. The United States was also due to announce manufacturing data later on Monday and key jobs data on Friday.