www.morningstar.ca 31 Jan 03(12:22 PM) |  E-mail Article to a Friend

TD May Sell or Close Int'l Waterhouse Units-Report

TORONTO (Reuters) - Unhappy with the performance at some of its discount brokerage units, Toronto-Dominion Bank <TD.TO> may sell or close TD Waterhouse arms in Europe, Asia and Australia, according to a newspaper report. Ed Clark, chief executive at Canada's third largest bank, told the Financial Post he was not prepared to tolerate any more losses at the discount brokerage units outside of North America beyond this year.

Toronto Stocks Down on Weak Golds at Mid-Morning

TORONTO (Reuters) - Toronto stocks slipped at mid-morning Friday, including weaker gold issues, while mounting worry about a possible U.S.-led war against Iraq had market players avoiding placing big bets going into the weekend. About an hour into the session, the Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> was down 19.38 points, or 0.3 percent, at 6526.95.

U.S. Blue Chips Rise; Techs Flutter Near Unchanged

NEW YORK (Reuters) - Blue chips climbed Friday after a report showed encouraging growth in manufacturing in the Midwest, but a warning of weak orders from chip equipment giant Applied Materials <AMAT.O> kept a lid on technology shares. Major market gauges erased early losses and headed higher. The technology-loaded Nasdaq Composite <.IXIC> wobbled around the unchanged mark, rising 1 point, or 0.12 percent, to 1,323 after climbing out of negative ground. The blue-chip Dow Jones Industrial average <.DJI> rallied 97 points, or 1.23 percent, to 8,042. The broad Standard & Poor's 500 index <.SPX> added 8 points, or 1.03 percent, to 853.

Canada's Red-Hot Economic Growth Eases in November

OTTAWA (Reuters) - Canada's economy slowed further from its sizzling pace as 2002 drew to a close, with gross domestic product growing just 0.1 percent in November, Statistics Canada said Friday. The latest data confirmed analyst expectations for the month, with the pace of growth easing from October's 0.3 percent gain.

Transalta Reports Loss on Steep One-Time Charges

CALGARY, Alberta (Reuters) - TransAlta <TA.TO>, Canada's biggest investor-owned power generator, said Friday it recorded a fourth-quarter loss because of one-time charges related to maintenance, order cancellations and phased decommissioning of a coal-fired plant. TransAlta, which this week expanded U.S. operations by acquiring a half stake in several power plants from El Paso <EP.N>, lost C$54.3 million ($35.5 million), or 32 Canadian cents a share, down from an year-earlier profit of C$46.5 million, or 27 Canadian cents a share.

Sierra Wireless Shares Drop on Lackluster Guidance

TORONTO (Reuters) - Sierra Wireless <SW.TO> tipped sharply lower Friday, as investors looked beyond better-than-expected profit and revenue to focus on a tepid outlook for the maker of wireless modems. Sierra was down 80 Canadian cents, or 11 percent, at C$6.50 a share just before midday on the Toronto Stock Exchange. In New York, the shares were down 53 cents at $4.23.

Newfoundland Power Reports Lower 2002 Profits

ST. JOHN'S, Newfoundland (Reuters) - Newfoundland Power <FTS.TO> reported slightly lower profits for fiscal 2002 Friday, stressing that last year's results included resolution of a long-standing tax case. The provincial power utility said it turned a profit of C$28.8 million ($18.8 million) in 2002, against C$28.9 million in 2001.

Ryanair Orders Boeing Jets, Swoops on Buzz

DUBLIN (Reuters) - Ryanair leapfrogged back to the top of Europe's budget airline industry Friday with the purchase of smaller rival 'buzz' from KLM and a multi-billion-dollar order for new planes from Boeing The Irish carrier said it had bought buzz for 23.9 million euros ($25.86 million) from KLM Royal Dutch Airlines to gain key routes in France and Germany, adding pressure on already struggling full-service European carriers.

Commerce Dept Delays Canada Wheat Duty Ruling

WASHINGTON (Reuters) - An initial U.S. decision on possible anti-dumping duties against Canadian durum and spring wheat has been delayed from mid-March until May 1, the U.S. Commerce Department said Friday. The agency cited the intricacies of a case that challenges the Canadian Wheat Board's marketing practices for durum and hard red spring wheat. Last year, the Commerce Department launched countervailing and anti-dumping duty investigations. North Dakota wheat farmers have asked the Bush administration to impose combined duties of as much as 37.5 percent against Canada's monopoly grain exporter.

Oil Steady, Awaits Bush, Blair on Iraq Showdown

LONDON (Reuters) - Oil prices took a breather from the week's gains Friday amid indications of a further recovery in oil production from strike-ridden Venezuela. But trading volume was relatively low as dealers were closely monitoring the latest Iraq talks between U.S. and British leaders for any signs of an impending war in Iraq.

www.forbes.com Reuters, 01.31.03, 12:33 PM ET  By Susan Schneider

NEW YORK, Jan 31 (Reuters) - Brazilian sovereign bonds drifted higher on Friday, nudging the broader market into positive terrain, as a solid currency and the promise of an increased primary budget surplus kept investors sanguine about the economic giant's financial prospects.

Brazil's share of J.P. Morgan's Emerging Market Bond Index Plus added 0.47 percent on the day, aided by a 0.875 point gain in the country's benchmark C bond <BRAZILC=RR> to 68.75 bid. The broader EMBI-Plus inched up 0.1 percent on the day.

Brazil's bonds posted gains on the heels of a strengthening in the currency, the real, and came as investors await the unveiling of a new primary fiscal surplus target next week.

Finance Minister Antonio Palocci is widely expected to lift the 2003 surplus target above last year's goal of 3.75 percent of gross domestic product, a move that would buoy confidence by underscoring new President Luiz Inacio Lula da Silva is serious about maintaining Brazil's financial health.

"Until the beginning of last week, I would say that most of the market expectations were in the range of 4 percent of GDP," said Ricardo Amorim, head of Latin American research at research firm IDEAGlobal. "But now it's probably around 4.25 or 4.3 percent of GDP and this has helped the market."

On Thursday, Brazil reported a record primary budget surplus of 52.4 billion reais ($14.7 billion), or 4.06 percent of gross domestic product (GDP), putting the nation well ahead of its annual International Monetary Fund target.

The gains by Brazilian bonds also follow Thursday's move by Morgan Stanley to raise its rating on the country's debt to outperform from market perform. The investment bank said it advised clients to move their positions to overweight from market weight amid optimism for Lula's legislative agenda.

MIXED VIEWS ON VENEZUELA Venezuelan bonds see-sawed in early trade and were hovering 0.29 percent lower by midday in the New York session as investors took a mixed view on the nation's political and economic turmoil. Foes of President Hugo Chavez have staged a general strike for the last two months in an effort to force the leader's resignation or new elections. The shutdown has choked off Venezuela's lucrative oil output, fueling worries the country may be left without enough cash to pay its debts.

With the work stoppage showing signs of easing, however, oil production has risen, allaying investor fears of a debt default. The president of state oil firm PDVSA said on Friday that output had topped 1.5 million barrels per day (bpd), a sizable jump from the paltry levels of a few weeks ago.

But at the same time, the ebbing of the strike suggests that Chavez is likely to remain firmly in power for now, said analysts. Chavez has made few friends on Wall Street, thanks to his populist rhetoric and antagonism to free market reforms,

"People are looking at where they have some upside this year in Latin America and maybe Venezuela is one of them," said an emerging debt trader. "If things start to settle down, if they start getting oil production back, (the spreads over U.S. Treasuries) should grind tighter."

Venezuela's political impasse has already drawn the attention of the international community, including the United States, which had relied on Venezuela for more than 13 percent of its oil imports. A six-nation group, including the United States and Brazil began a mission in Caracas on Thursday in an effort to secure an elections deal to end the strike.

"If anything, I think the feeling is that the U.S. will draw closer ties (with Venezuela), especially if we invade Iraq, and then we're going to need oil from somewhere. We'd need to mend that up pretty quickly," said the trader.

The prospects for a resolution to the strike prompted Morgan Stanley to raise Venezuela to market perform from underperform on Thursday. Merrill Lynch, meanwhile, said a slow recovery in oil output and the nation's efforts to preserve cash for debt payments prompted it to raise Venezuela's bonds to market weight from underweight in its model portfolio.

Peru's debt, meanwhile, was little changed on the day after Thursday's sale of $500 million in 12-year global bonds. (Reporting by Susan Schneider, editing by Andre Grenon; Reuters Messaging: susan.schneider.reuters.com@reuters.net, tel: +1 646 223 6319)

acs.yellowbrix.com Source: Houston Chronicle Publication date: 2003-01-31

Jan. 31--Two big chemical companies showed how their profit margins are being squeezed by higher energy prices.

Chemical makers shared a common problem -- the price of the natural gas and oil they use has surged -- forcing them to raise prices and cut costs as they struggle to come out of a long slump.

Dow Chemical Co. reported Thursday it saw a 35 percent rise in the price of feedstock and energy costs, from a year earlier. But prices of the products it sells only rose by about 6 percent.

Midland, Mich.-based Dow announced a fourth-quarter loss of $809 million. However the worst of the loss was due to a $828 million charge to set aside money to cover an increase in its expected asbestos liabilities.

Also Thursday Lyondell Chemical Co. of Houston announced a fourth-quarter net loss of $93 million, a reversal in fortunes from the third quarter when its net loss was only $2 million.

For the year it reported a loss of $148 million, little changed from the 2001 net loss of $150 million.

Exxon Mobil Corp. also reported a drop in its chemical business. The profit on its chemicals business fell by almost two-thirds to $76 million because of higher costs for oil and natural gas which are used for both feedstocks and to power the plants.

While Lyondell's performance improved mid-year, it fell back due to a confluence of events, the company said in a written statement.

These events include the yearlong climb in energy costs and the oil industry strike in Venezuela, which affected its refining joint venture with Citgo, which is owned by the Venezuelan national oil company. Natural gas prices have gone up as this cold winter cut deeply into inventories.

Both companies complain about the rising prices for crude oil and natural gas, and are compensating by raising the prices of the products they sell.

Lyondell feels pretty good about its prospects. "I think we will get a substantial increase, but not necessarily every penny," said President and Chief Executive Officer Dan F. Smith. "There seems to be more of a general push than is typical in these businesses."

Lyondell has announced price increases across virtually the entire product line, although there remains room for some negotiations with customers.

To analyst Andrew Cash of UBS Warburg in New York, the chemicals industry is caught in a confluence of negative events and basically is still "bouncing along on the bottom."

The pressure for Dow Chemical, whose biggest operation is in Freeport, has been getting more intense of late.

Dow expects its cost for feedstocks and energy to be about $400 million higher in the first quarter than in the fourth. Compared to the first quarter of 2001, this cost increase may be a whopping $1 billion, said President and Chief Executive Officer William Stavropoulos in a conference call with analysts

It isn't waiting for an industrywide comeback to restore its bottom line.

It's tightening its operations, which will include sales of some operations and shutdowns of others, are will likely lead to 3,000 to 4,000 job reductions before the year is out. On Thursday it announced plans to close ethylene crackers that are part of its complexes in Texas City and Seadrift.

While times are tough now, the economy is growing and there are some signs of hope in this complex business.

For the quarter, Dow said its sales were up 9 percent from a year earlier to $6.9 billion, the result of a 6 percent higher price and 3 percent greater volume.

Some products look promising, such as styrene, which already is in fairly tight supply, Cash said. This tightness should help with prices.

There was an industrywide price increase for polyethylene, 5 cents per pound, announced last July but not actually implemented until Jan. 1. An additional increase of 6 cents per pound has been announced for Feb. 1.

Polyethylene rose 5 cents per pound industrywide, which went into effect Jan. 1. Another increase of 6 cents per pound will take effect Saturday.

The markets are expected to firm for some products as early as March, Lyondell believes. Its Equistar venture announced price increases across basically the entire polymer lineup.

Chemical makers may also get some significant relief on the cost side. Production is slowing rising in Venezuela, and some end to the standoff with Iraq could reduce the price premium due to fears that war would cut off exports.

"If these events occur, our operations should benefit from a rebound similar to what we saw in the second quarter of last year," said Smith.

Cash, the analyst, sees the chemical industry holding onto a portion of those better profit margins for a while, "to make up for some of the hurt" it is experiencing now.

In the meantime, dealing with tight supplies has been a trick.

Lyondell has done a masterful job of finding crude oil for its Lyondell-Citgo refining venture, said the analyst. The operation, which was set up to refine Venezuelan crude, is back to full operation after scaling back for a time due to shortages of crude.

It has also cut back because on capacity.

Lyondell last year mothballed an ethylene plant in Lake Charles, La., with about 800 million pounds capacity, which it Thursday characterized as being in deep sleep.

Lyondell's $93 million net loss for the quarter is equals to 58 cents per share, compared with the year earlier's net loss of $53 million or 46 cents per share. Sales were $2.4 billion against $1.56 billion a year earlier.

Its net loss of $148 million for the year is equal to $1.10 per share and compares with the prior years $150 million loss, equal to $1.28 per share. Sales were $8.17 billion against $7.66 billion in 2001.

Dow's announcement Thursday of closing two Union Carbine ethylene crackers will eliminate 2.5 billion pounds in capacity, which Cash says is 1 percent of world capacity.

It said it was getting rid of operations which were under-utilized or non-competitive.

The Texas City cracker will be shut down by mid-year and the Seadrift cracker by year's end. Both are parts of much larger facilities that will continue, said Dow spokeswoman Cindy Newman.

Dow has identified various facilities with a book value of $100 million for either closure or consolidation, it said, and beyond that is studying assets representing several hundred million dollars more.

Additionally, it has identified assets with 2002 revenues of approximately $1.5 billion which are candidates for sale or swap.

To see more of the Houston Chronicle, or to subscribe to the newspaper, go to www.HoustonChronicle.com

www.forbes.com Reuters, 01.31.03, 2:10 AM ET By Bill Tarrant

SINGAPORE, Jan 31 (Reuters) - The dollar was steady, Asian stocks drifted following a mauling on Wall Street and safe-haven gold and oil were firm on Friday, after President George W. Bush said he would give diplomacy just weeks to avert a war with Iraq. Japanese stocks fell broadly amid fresh signs of sluggishness in the global economy, while other key Asian markets were shut ahead of Lunar New Year holidays.

Gold was trading at around $370 an ounce, up 25 cents from New York's last quoted price, while crude oil futures held steady as the market paused for breath after three days of gains.

The dollar stood its ground versus the euro and yen in Asia but mounting war fears and the latest slide in U.S. share prices cast a shadow over the greenback.

"As long as people fret over a U.S. war, it's difficult to buy the dollar," said Itochu Corp chief economist Seiya Nakajima.

Bush on Thursday welcomed the idea of exile for Iraqi President Saddam Hussein and said he would give diplomacy "weeks not months" to end the showdown over disarming Baghdad. That reinforced views in the market that the United States may start a war in late February, when U.S. forces in the Middle East are expected to be ready for combat.

NORTH KOREA NUCLEAR STOCKPILE A New York Times report on Friday, saying American satellites over North Korea had detected what appeared to be trucks moving the country's stockpile of nuclear fuel rods out of storage, rippled through markets as well.

Intelligence analysts have seen activity around the Yongbyon nuclear complex throughout January, prompting fears within the Bush administration that North Korea is preparing to produce a half dozen nuclear weapons.

Japanese technology and telecom stocks fell, but the tech-sensitive Nikkei average <.N225> staged a last-minute rally to close 0.28 percent higher at 8,339.94. The broader TOPIX index <.TOPX> lost 0.48 percent at 821.18.

Telephone giant NTT DoCoMo <9437.T> fell 2.9 percent and Sony Corp <6758.T> lost 1.3 percent. But Pioneer <6773.T> surged 9.3 percent after the world's biggest maker of car audio equipment raised its 2002/03 net profit forecast and Fuji Photo <4901.T> rose 3.7 percent on encouraging third-quarter results.

"The market is basically directionless," said Masaru Kazama, head of equities at Nissan Securities.

Australian shares <.AXJO> fell 0.25 percent, down for a third straight day, with News Corp <NCP.AX> off 1.65 percent following the drubbing that AOL Time Warner (nyse: AOL - news - people) took on Wall Street.

Singapore shares <.STI> dropped 0.3 percent to close at a fresh 16-month low. Markets in Hong Kong, Taiwan, China, South Korea and Malaysia were closed for the Lunar New Year holidays.

U.S. GDP STALLS A report showing U.S. economic growth had stalled in the final quarter of 2002 hit stocks in the world's biggest economy and added fuel to a rally in U.S. Treasuries.

But after-hours trading pushed up U.S. stock futures by 0630 GMT, indicating a stronger start on Wall Street later.

The blue-chip Dow Jones Industrial average <.DJI> fell 2.04 percent to 7,945 on Thursday, finishing below the psychological 8,000 level for the second time this week. The Standard & Poor's 500 index <.SPX> fell 2.29 percent to 844.57. The tech-loaded Nasdaq Composite <.IXIC> ended down 2.65 percent at 1,322.11.

U.S. investors have yet to see solid evidence of a healthy recovery in corporate profits at the height of the fourth-quarter reporting season. AOL Time Warner's stock fell 14 percent after the company posted a 2002 net loss of nearly $100 billion -- the largest in U.S. corporate history.

Gross domestic product, a broad measure of economic activity within U.S. borders, crept ahead at a 0.7 percent annual rate in the October-December quarter, well off the four percent of the prior quarter but in line with expectations.

Front-month March crude stood at $33.84 a barrel at 0630 GMT, almost unchanged from Thursday's close in New York, where the contract settled 22 cents higher at $33.85.

Venezuela's two-month oil strike seemed to falter as the government said output was now up to 1.4 million barrels per day (bpd), recovering steadily from lows of 150,000 bpd in December. Currency traders said the market would look ahead to Bush's meeting with British Prime Minister Tony Blair later in the day to see if any timeframe emerged for a possible attack.

As of 0650 GMT, the dollar was at 119.13 yen <JPY=> compared with 119.02 in late U.S. trade. The euro was at $1.0809 <EUR=> against 1.0815 and 128.67 yen <EURJPY=R> versus 128.71.

The euro withstood comments from European central bank council member Ernst Welteke, who reiterated on Thursday the pace of the euro's rise, if maintained, could hamper euro zone growth.

In Asian trade on Friday, U.S. Treasury prices trimmed gains made overnight on slumping stock prices and the worrisome GDP growth report. Two-year notes <US2YT=RR> were at 99-28/32, yielding 1.70 percent, flat from its late New York levels.

www.chron.com Jan. 30, 2003, 11:22PM By BILL HENSEL JR.

With Continental Airlines' Gordon Bethune on the front line, airline executives are lobbying for government help in the event of war with Iraq.

As the threat of war looms, the industry is seeking tax relief, the relaxing of some antitrust laws and relief on fuel taxes. They also want the federal government to reduce oil prices by releasing crude from the Strategic Petroleum Reserve.

Bethune, chairman and chief executive officer of Houston-based Continental, told a gathering in New York on Thursday that the nation needs a national transportation plan in place if war erupts.

Collectively, U.S. airlines have lost well more than $10 billion in the past two years and have reduced service and laid off employees. They are not expected to become profitable before 2004, and a war could magnify their troubles.

The major airlines find themselves in such a predicament because of changing business travel trends that have cut airlines' revenues, combined with the fallout from the terrorist attacks in 2001.

One feature the major airlines would like to see would be a waiver of a portion of the antitrust law, which forbids them to discuss flight schedules with each other, in the event of war. That could enable them to coordinate routes and flight frequencies and reduce service where demand is low.

Such discussions are prohibited now because it could restrict competition.

J.P. Morgan Securities airlines analyst Jamie Baker said some of the ideas being discussed by airline executives have merit, while others are questionable.

"War should not be an excuse for anti-competitive, anti-consumer behavior, though it is an appropriate backdrop to highlight the overtaxation of the airline industry," Baker said.

"In the event of a prolonged military conflict, some level of government assistance should be expected, although we would assume it would stop well short of re-regulation or the accommodation of collusion."

The airlines also want the government to temporarily suspend a $2.50 security tax implemented by the federal government after the Sept. 11 terrorist attacks to pay for increased security measures.

Bethune has long called for the elimination of that tax, saying it unfairly burdens the airlines and airline passengers.

"We are asking passengers to underwrite the national security," the Continental CEO said in an interview recently. "It is just unprecedented."

Others have called for releases from the petroleum reserves because supplies have been tight since the sharp drop in exports from Venezuela since political strife erupted there.

But President Bush appears unwilling to do that.

Companies that service the major airlines already are preparing for war. Texas Pneumatic Systems of Arlington recently developed a contingency plan, company President Bernie Rookey said.

The businessman worked for a similar company during the Gulf War in 1991 and said the airlines saw about a 20 percent decrease in business.

"It was pretty poor that year," he said. "I think generally you are going to see the American public is going to be reluctant to fly on airlines. Basic travel is going to cease or be reduced for a period of time."