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Selasa, 05 Juli 2011

Husky bets big on north Canada oil drilling rights

By Jeffrey Jones, Reuters July 5, 2011

Husky bid $376-million for two parcels near Norman Wells in the Northwest Territories, vastly outspending some of the world’s largest oil majors, the government announced on Monday.

Photograph by: Leah Hennel, Postmedia News

CALGARY – Husky Energy Inc has opened its wallet to grab the lion’s share of $534-million (US$556-million) of winning bids for oil-drilling rights in the central Mackenzie Valley area of Canada’s far north, sparking speculation it may be chasing a rich prospect.

In the 2011 government auction of drilling rights in northern lands, Husky bid $376-million for two parcels near Norman Wells in the Northwest Territories, vastly outspending some of the world’s largest oil majors, the government announced on Monday.

“(Husky) really spent a lot of money relative to the peers on the play. Could they be targeting an oil-rich play? Potentially,” Macquarie Capital Markets analyst Chris Feltin said. “Maybe they think they’ve keyed into a new play up in that region.”

Among other winners, ConocoPhillips bid $67-million for a parcel in the region. Royal Dutch Shell Plc and a partnership of Imperial Oil Ltd and Exxon Mobil Corp each picked up land with bids of $43-million.

Junior northern explorer MGM Energy Corp scooped up three parcels with bids totaling $5-million. The auction was held by the Oil and Gas Management Directorate arm of the federal government’s Aboriginal Affairs and Northern Development ministry.

The dollar figures represent the amount of money the bidder intends to spend exploring on the parcel during the initial five-year period of a nine-year license.

Imperial, Exxon, ConocoPhillips and Shell are partners in the long-delayed Mackenzie Valley Gas pipeline, which would ship natural gas along the Mackenzie Valley from gas fields they discovered in the 1970s on the Beaufort Sea coast.

The $16.2-billion pipeline project won the last of its major regulatory approvals earlier this year, but its construction is anything but assured as the partners rerun the numbers on its economic viability and seek a fiscal deal with Ottawa.

Meanwhile, communities in the sparsely populated Northwest Territories wait for the development of a natural gas industry and economic benefits that have so far proven elusive.

However, the central valley region is also known for oil prospects, and is served by the Norman Wells pipeline, which feeds into Enbridge Inc’s export network.

Husky had signaled that it planned no activity on its existing Northwest Territories lands in 2011, Feltin said.

“This is a change in what they’ve indicated previously, so maybe there is something more than just a raw gas story going on here,” he said.

Shares in Husky, which is majority-owned by interests controlled by Hong Kong billionaire Li Ka-shing, were up 1 Canadian cent at $26.31 on the Toronto Stock Exchange late on Tuesday morning.

Small business owners happier than a year ago

Financial Post July 5, 2011

Small business owners are happier than they were a year ago, despite working longer hours and having to cope with a strong dollar, says a poll released Tuesday by TD Canada Trust.

Photograph by: Fotolia, Fotolia

OTTAWA — Small business owners are happier than they were a year ago, despite working longer hours and having to cope with a strong dollar, says a poll released Tuesday by TD Canada Trust.

The survey of 402 small business owners in Montreal, Toronto, Vancouver and Calgary was conducted by Environics Research in mid-spring and found that 66% considered themselves “very happy,” compared with 63% a year ago.

The reasons for their satisfaction derive from the motivations that brought them into becoming entrepreneurs in the first place, such as being one’s own boss, controlling one’s destiny and making more money, according to the survey.

“In 2011 we saw an increase in the happiness levels of small business owners compared with the previous year. When owners are optimistic, they tend to be more likely to invest in their business by boosting spending and hiring, which is great for their local communities,” the survey said.

Tempering their mirth, however, was the impact of the soaring loonie. Thirty-six per cent of those that export said the dollar is affecting their profits and 22 per cent have seen a fall in demand from customers abroad.

Nevertheless, the overall results were recorded despite small business owners having to put in slightly longer hours to achieve their goals. The survey found that small-business owners work an average of 48.7 hours a week, up from 47.8 hours recorded in 2010.

Jamel Richardson, Alex Suber, Tim Brown, Ian Logan earn weekly CFL awards

By Postmedia News July 5, 2011

Montreal Alouettes reciever Jamel Richardson (R) breaks tackle by British Columbia Lions Adam Leonard on his way to a touchdown during first half of Canadian Football League game in Montreal June 30, 2011.

Photograph by: John Mahoney, Montreal Gazette

Jamel Richardson hasn't missed a beat.

The Montreal Alouettes slotback started the 2011 Canadian Football League season the way 2010 ended, earning the honour Tuesday as the CFL's offensive player of the week. The award came less than eight months after winning the most valuable player award at the 98th Grey Cup game in Edmonton.

Winnipeg Blue Bombers defensive back Alex Suber was named the defensive player of the week, while B.C. Lions running back Tim Brown was the top special teams player. Winnipeg safety Ian Logan earned the nod as the top Canadian.

Richardson hauled in nine catches for 162 yards and a pair of touchdowns, as the Alouettes edged the Lions 30-26 on Thursday. The 29-year-old Texan scored touchdowns of 40 yards and 46 yards in the second quarter as the Als took a 27-10 halftime lead.

Suber picked up six tackles in Winnipeg's 24-16 victory on Friday. He also came up with the game's turning point by picking up a fourth-quarter interception and returning it for a 66-yard touchdown that gave the Bombers the lead for good.

Brown, in his first CFL game, returned a Montreal punt in the second quarter for a 97-yard touchdown. He finished the game with five punt returns for 132 yards and three kick returns for 50 yards.

Logan, meanwhile, intercepted two passes and added three tackes in Winnipeg's win. The Wilfred Laurier alumnus is in his sixth season with the Bombers.

Senin, 27 Juni 2011

Greek rebel lawmakers may block austerity: deputy PM

By Daniel Flynn and Harry Papachristou, Reuters June 26, 2011

Demonstrators wearing masks protest against the austerity economic measures and corruption in front of the parliament at Syntagma (Constitution) square in Athens June 25, 2011.

Photograph by: John Kolesidis, Reuters

ATHENS- Greece's deputy prime minister warned on Sunday that rebel lawmakers may block some reforms sought by international lenders, though parliament will probably back an overall austerity package this week to avert national bankruptcy.
Adding to Socialist Prime Minister George Papandreou's dire problems, the conservative opposition rejected appeals from the government and senior European Union politicians to vote in favour of the five-year plan.
Parliament is due to start debating on Monday the program of tax increases and spending cuts worth 28 billion euros. Papandreou needs parliamentary approval this week to secure the next payment under a 110-billion euro EU/IMF bailout.
Deputy Prime Minister Theodore Pangalos told Spanish newspaper El Mundo he was optimistic about overcoming discontent in his PASOK party to win a first round of general votes on tax and spending targets and the creation of a privatization agency.
But he was more cautious about whether the government could push through further enabling legislation on individual budget measures and privatization of specific state assets.
"I think the package of short and medium-term measures with which we basically hope to establish the framework to undertake reforms will be approved without difficulty," Pangalos told the newspaper in the interview published on Sunday.
Approval of specific laws to enact painful fiscal reforms and privatizations may be more difficult to achieve, he said.
"That's where we may have problems. I don't know whether some of our legislators will vote against it. It's possible."
Without the next 12-billion euro tranche of funding from the IMF and European Union, Greece faces the prospect next month of becoming the first euro zone country to default, sending shockwaves through a fragile global financial system.
But many Greeks who have lost jobs or seen their real income decline by nearly one-fifth over the last two years have reacted angrily to measures they say fail to target wealthy tax evaders whom they regard as responsible for Greece's plight.
Papandreou's PASOK party has seen its slender majority whittled down by five defections over the last 13 months, leaving it with 155 seats in the 300-member parliament.
In a rare piece of good news for Papandreou, one of the two PASOK legislators who announced they would vote against the package appeared to be wavering on Sunday after holding talks with Finance Minister Evangelos Venizelos at the weekend.
"One moment I veer towards a 'no', the other towards a 'yes'. I will make a last-minute-decision," Thomas Robopoulos told Reuters. A third Socialist MP has said he will support the deal only if Venizelos gives him assurances on certain measures.
NATIONAL STRIKE
With Greece unable to return to international bond markets next year, as foreseen under its EU/IMF program, European leaders are working on a new bailout of a similar size, including a contribution from private sector banks which would agree to a "voluntary" rollover of their holdings of Greek debt.
Euro group president Jean-Claude Juncker, the prime minister of Luxembourg, said on Sunday that the size of this private sector contribution would be discussed at a euro zone finance ministers' meeting in early July.
Ramping up pressure on the government, unions have called a two-day national strike from Tuesday. Many companies, including the main electricity group PPC _DEHr.AT_ which is slated for partial privatization next year, have started rolling stoppages.
Pangalos, who after a cabinet reshuffle this month shares his deputy premier's title with Venizelos, said he believed the conservative opposition would vote in favour of some measures.
But New Democracy leader Antonis Samaras turned a deaf ear to the appeals from home and abroad to support the package, saying the painful measures would only deepen Greece's worst recession in 37 years.
"You can't ask for more taxes in an already overtaxed country, in a market that has been sucked dry, with economic activity at zero and a huge recession," he said in a statement.
Greek ministers and policymakers had urged legislators to approve the austerity package, adding to calls from European leaders to avoid a crisis in the 17-member euro zone.
German Finance Minister Wolfgang Schaeuble urged the Greek parliament to approve the measures, warning that the EU would not relax this condition for disbursing the next aid tranche.
"The stability of the entire euro zone would be in danger and we would need to quickly ensure that the risk of contagion for the financial system and other euro area countries would be contained," he told German Sunday newspaper Bild am Sonntag.
Venizelos, a Socialist party baron given the finance portfolio in the cabinet reshuffle, clinched the agreement of EU and IMF inspectors on Thursday to a raft of measures which he hopes can put government finances back on an even keel after it failed to meet targets under its international program.
The steps include a one-off solidarity levy on income, a rise in heating fuel tax and the introduction of income tax even for low earners on wages of 8,000 to 12,000 euros a year.
A peaceful crowd of around 1,000 people gathered on Sunday in Syntagma square outside parliament, which was protected by a line of riot police.
With youth unemployment running at around 40 percent, many of those who have taken to the streets in protest or camped in Syntagma over the last month are young people who fear the measures will worsen their dim economic prospects.
"The choice is not between voting for the measures or defaulting, but between economic and social bankruptcy on the one hand and growth and social cohesion on the other," said the Left Coalition, a small opposition party, in a statement.

Minggu, 26 Juni 2011

Senator denies using influence to boost private energy company

By Laura Baziuk, Postmedia News June 25, 2011

A Canadian senator denied Saturday he used his political influence to benefit a Calgary-based oil and gas company, in the wake of police allegations that a government official committed a breach of trust while in talks with foreign authorities.
The Globe and Mail reported Saturday that the RCMP is investigating Sen. Mac Harb.
A sworn affidavit presented in Alberta provincial court, which has been heavily redacted, accuses a government official of using a special passport reserved for federal officials to travel to Bangladesh and lobby officials on behalf of Niko Resources.
The official’s name is blacked out, but the Globe and Mail reported it had “independently confirmed” the person to be Harb.
“I am aware of the investigation that has been undertaken by the RCMP into Niko Resources and I have cooperated fully with the RCMP,” the Liberal senator said in a statement. “I did not make any representations to federal government officials nor did I use my position as a Senator for personal gain or to further the private interests of Niko.”
Harb said he disclosed all details of his work to the Senate Ethics Committee, as required under conflict of interest guidelines.
“As a city councillor, a Member of Parliament and as a Senator, I have always put the public interest first,” said Harb, a former Ottawa-Centre MP. “This investigation has therefore caused me grave concern and I have cooperated fully with the authorities. I am confident that there will be no finding of wrongdoing.”
Cpl. Kevin Duggan, of the RCMP’s Calgary anti-corruption unit, swore in the 2009 affidavit that a Canadian government official had abused his or her office “for a purpose other than the public good.” The document said he or she had lobbied on a behalf of a private company on at least four trips between Aug. 2004 and July 2006, despite warnings from Canadian diplomats to desist.
The affidavit was seeking permission to demand evidence, in the form of credit card statements, account transactions and mortgage records, from financial institutions, including a Calgary branch of the Bank of Nova Scotia, in relation to the case.
When asked Saturday about a formal investigation on Harb, Sgt. Greg Cox with the RCMP national office said he could neither confirm nor deny it, and such a thing would only be made public “if and when” a charge is laid.
Niko president and CEO Edward Sampson said Harb had approached the company about working for it.
“He offered to support the company’s business efforts in Bangladesh in his personal capacity, independent of being a senator,” Sampson told Postmedia News. “He advised Niko that he had obtained all necessary approvals from the Senate Ethics Committee to engage in the arrangement.”
He said Crown attorneys had investigated the matter and “determined that no charges against Niko were warranted.”
Last Friday, Niko was fined $9.5 million by an Alberta judge after pleading guilty to bribing a Bangladeshi minister with the use of a luxury SUV and free trips to Calgary and New York. The minister had been assigned to determine what compensation should be paid to villagers affected by explosions at a Niko drilling site in 2005.
Three years earlier, Harb and then-Niko president Robert Ohlson travelled as part of a Canadian trade delegation to Dhaka, the Bangladeshi capital. That’s according to a speech by David Kilgour, acting secretary of state (Asia-Pacific) at the time, who had addressed a chamber of commerce luncheon.
Charlie Angus, New Democrat MP and democratic reform critic, said the allegations against Harb point to the need to abolish the Senate altogether.
“We’ve had convicted criminals in the Senate, we’ve had people up on charges in the Senate,” Angus said. “And whether there’s evidence to warrant this case going forward or not, I think it’s a reminder that . . . the Senate is an unelected and unaccountable body.
“They’re in charge of their own oversight and they have pitiful checks and balances in place for code of conduct.”
The Senate conflict of interest code says senators must declare their private interests if they believe a matter before the chamber might affect those interests. Senators must also not use their position to influence “individuals, entities, or governments” in an effort to benefit themselves or others.
lbaziuk@postmedia.com
twitter.com/laurabaziuk

Social media IPOs too risky 'to touch with a barge pole'

By Vito Pilieci, Postmedia News June 24, 2011

A LinkedIn Corp. banner hangs on the front of the New York Stock Exchange

Photograph by: Michael Nagle/Bloomberg, Michael Nagle/Bloomberg

The numbers are staggering.
LinkedIn Corp. raised $352.8 million in its stock market debut in May, an opening day that valued the company at $8.9 billion (all figures US).
Groupon Inc. has filed to raise as much as $1 billion in an initial public offering later this year. If it hits its target the company could be worth more than $15 billion.
Pandora Media Inc. raised more than $235 million in its IPO, which put the company's value at $2.78 billion. And recent paperwork from Facebook Inc. values the social media giant at $100 billion. Facebook is positioning to hold its own public offering in early 2012.
A decade ago, it was dot-com companies such as Webvan, Pets.com and theGlobe.com that were thought to herald the beginning of a new age of investing. All of them collapsed. That has many investment industry watchers wondering why there could be so much buzz today about another batch of unprofitable enterprises that are unlikely to turn around their fortunes anytime soon.
"It's bubble 2.0," declares John Pliniussen, an associate professor of marketing with the Queen's University School of Business. Investors, he warns, "are tossing the dice on an unknown business model."
With social media gaining ever more attention, almost all of the high-profile online services see an opportunity to cash in on their popularity by offering shares to the public. However, unlike Apple Inc. or Research In Motion Ltd., which make products to sell to consumers, social media websites don't really sell anything.
The sites provide places for people to gather, share deals, listen to music or share job leads - activities that aren't exactly conducive to supporting a growing, cash-hungry business. And many, such as Groupon, which provides online coupons for special offers at local shops, and Pandora, which allows people to customize an Internet radio station based on their musical tastes, are easy to imitate. Knockoffs such as Living Deal and Slacker Radio have already popped up.
"This is the big problem. You start looking at Groupon and there is no reason to believe that Google, which has a long history of very good software development, can't replicate what Groupon has done very easily. When you get down to it, all they are doing is electronically sending you coupons. It's the same with a lot of these things," says Laurence Booth, a finance professor with the Rotman School of Business at the University of Toronto.
"Pets.com (an online pet food vendor) went from a market value of $10 billion to bankruptcy in a span of 18 months. I would look at all of these (IPOs) as being very risky."
Groupon's growth has been stunning. As of the end of March, 83.1 million people in 43 countries had signed up for its daily deal newsletter. Its revenues jumped to $714 million in 2010 from $94 million in 2008. In the first three months of 2011, it reported sales of $644.7 million.
That still wasn't enough for the Chicago-based company to turn a profit.
According to the regulatory filings that are mandatory in preparation for an IPO, Groupon's sales growth between January and March couldn't offset a $102.7-million loss. And the company doesn't expect to see profits anytime soon.
It's important to note that mandatory regulatory filings must include all possible negative scenarios that could affect the company after its IPO, so potential investors know the risks.
"We have incurred net losses since inception and we expect our operating expenses to increase significantly in the foreseeable future," reads the company's filing. "We may not maintain the revenue growth that we have experienced since inception. We do not know whether this market will continue to develop or whether it can be maintained."
Groupon isn't alone.
LinkedIn, a website that allows professionals to network and share job opportunities, issued a similar warning before kicking off its IPO last month.
After losing money since 2008, LinkedIn turned its first solid profit - $10 million in net income - between January and September 2010. LinkedIn, which has more than 90 million members in 200 countries, reported sales of $161.4 million for the first nine months of 2010, but warned investors that tough times lie ahead.
"We expect that, in the future, our revenue growth rate will decline, and we may not be able to generate sufficient revenue to sustain our profitability," reads the company's regulatory filing. "We also expect our costs to increase in future periods, which could negatively affect our future operating results. In particular, in 2011, our philosophy is to continue to invest for future growth, and as a result we do not expect to be profitable."
On its first day on the New York Stock Exchange, LinkedIn's shares more than doubled to close at $94.25.
Pandora is another example. Despite having 80 million registered users listening to its radio service in the United States and more than $90 million in revenues, Pandora lost $328,000 in the last nine months of 2010 (in the company's current fiscal 2011 year). That was a big improvement over the $15.5-million net loss it reported for its full fiscal 2010 year (which ended Jan. 31, 2010) or the $27.4-million net loss it reported in 2009.
Yet on Pandora's opening day of trading, shares shot to $24 before falling to $17.42, for an 8.9 per cent gain on their opening price. In just one day, Pandora vaulted to become about 10 times more valuable than Internet "e-tailer" Amazon.com and 20 times more valuable than broadcaster CBS Corp.
Finding observers in favour of the ballooning IPO prices is a difficult task. The University of Toronto's Booth said consumer interest and opportunistic day traders are fuelling the rapid price increases seen over the past few weeks.
"What's happening now is that people are looking for the first-day bounce," he said. "They are looking for the stock price to jump up, 20 per cent or 30 per cent because there is a lot of interest in all of these."
The fast-rising valuations in social media firms have drawn immediate comparisons with the dot-com run-up in the late 1990s when Internet grocer Webvan was valued at $1.2 billion and Internet toy retailer EToys.com hit an $8-billion valuation. One of the original social networking services, theGlobe.com, became the world's fastest rising IPO, with shares that started at $9 rocketing to $97 before closing at $63.50, for a 606 per cent increase in a single day. At its peak, theGlobe.com was valued at $840 million.
"We hope that we learn from our mistakes and that is not always the case," says Steve Foerster, a professor of finance at the Richard Ivey School of Business at the University of Western Ontario. "It is to some extent a leap of faith that there is going to be a business model (for these new companies) that will provide positive cash flows consistently."
According to Pliniussen of Queen's University, potential investors eagerly watching the social media IPO frenzy of 2011, much like those who invested in the dot-com bubble of the late 1990s, are not concerning themselves with financial performances.
They think of the IPO as a lottery ticket and the only way to grab a piece of a company's potential profits, says Pliniussen. It's the hope that these companies will turn future profits that is driving the buzz.
"We don't know what the upside is. With the amount of users they are getting, if they could monetize that the cash flows would be enormous." Pliniussen says.
"We are not rational investors. People buy based on emotion. There is a sense of excitement. When Google came out at $100 (per share), everybody was extremely skeptical. The rest is history. That same faith in future speculation is happening again."
Above all others, Facebook is the social-media company that is being touted as the next Google. A global Goliath, Facebook has more than 680 million active users.
While Facebook is rumoured to be preparing for an IPO next year, the company has not yet filed any of the required paperwork. However, with a company this big and high-profile, information about its finances has leaked.
According to MSNBC, Facebook earned $600 million in 2010, marking its second straight year of profitability. In 2009, its profits were reportedly in the tens of millions of dollars. Prior to that it's been reported that the company has been unprofitable since its launch in 2004.
By comparison, Google reported three years of solid profits prior to listing its shares on the public exchange. Google earned $11 million in 2001, $187 million in 2002 and $342.5 million in 2003. In the six months leading to its IPO in August 2004, it earned $326.3 million. Google shares opened at $85 and closed that day at $100.34, valuing the company at $27.2 billion. Recently, the company's shares were trading above $489, valuing Google at $157.9 billion. The company reported more than $8.58 billion in revenues and a $1.8 billion net profit during the first three months of this year.
But while Google, with its Internet search engine paving the way, has seen demand for its products increase in the years since its public debut, most other social media firms are already struggling to maintain consumer support.
According to the website Inside Facebook, the social media giant lost six million users in the U.S. and 1.52 million in Canada between May and June. The fall left Facebook with 149.4 million users in the U.S. and 16.6 million in Canada. Facebook also saw noteworthy declines in traffic from Britain, Norway and Russia.
With almost 50 per cent of the population of Canada and the U.S. already active on Facebook, the site could be reaching its saturation point in the North American market. To continue its expansion, it must look at emerging markets such as China, India and South America. There, however, it will face stiff competition from incumbents such as Orkut, Renren and Hi5. Facebook is entering those regions as the newcomer.
Groupon is experiencing similar growing pains. A recent study by Rice University in Houston, Texas, found that 32 per cent of participating merchants said they lost money through their Groupon offerings. Another 66 per cent said they made money, but of all the merchants surveyed, more than 40 per cent responded that they would not be running another discount through the company.
The shaky financial footing and limited growth potential of many of the social media companies should have investors thinking about the extent of the risks involved, says Laurence Booth of the Rotman School.
And if it was his money?
"I would not touch them with a barge pole," he replies. "My personal judgment is, that with most of these sites, it's incredibly difficult to make money. I take risks, but I don't gamble. I would regard stock like Groupon as being a gamble."

Wall Street Week Ahead: Bulls ready to charge into wall of worry

By Rodrigo Campos, Reuters June 26, 2011

The trading floor of the New York Stock Exchange in a file photo.

Photograph by: File, Reuters

NEW YORK (Reuters) - A bounce could be the cards for U.S. stocks this week as bulls defend a key technical level and portfolio managers buy the quarter's winners to prop up their books.
But gains coming from health care, staples or other defensive sectors that have outperformed the market in the last several months would only support the notion that the U.S. stock market needs to complete its correction phase and panic selling must occur before a more sustained comeback develops.
"We want to see more fear," said Ari Wald, equity strategist at Brown Brothers Harriman in New York.
Be careful what you wish for.
The problems that have driven the recent decline, including Greece's slow march toward a default on its debt, weak U.S. economic data and the creeping deadline to lift the U.S. debt ceiling, are far from being resolved.
HOLDING THE 200-DAY SHOWS THE WAY
Despite a drop that dragged the S&P 500 as much as 8.2 per cent below its three-year high hit in early May, the index held above its 200-day moving average — a major line in the sand as the bulls and bears battle for control of the market.
The slide had been telegraphed for weeks and the market's by-the-book performance — pulling back to a widely followed level — seems too well choreographed for some analysts.
"The fact that we went to the 200-day . . . seems just a little too perfect," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.
He said the timing of the move was supportive, as the market creates a technical base before resuming its upward move on the back of strong earnings.
"You might get an attempt at a shakeout move," Pado said. "But sometimes the majority is right."
Even if they are right, they don't seem too convinced. So far this quarter — on track to be the first in the red for the S&P 500 in the last year — daily volume on the New York Stock Exchange, NYSE Amex and Nasdaq has averaged 7.22 billion shares.
That is down from the 7.94 billion shares traded daily during the first quarter, when the S&P 500 gained 5.4 per cent. Commitment to the market has waned. The frantic selling, the flushing down of day traders seems absent so far in this corrective phase.
Despite holding above that level, the market has not cleared the danger zone of dipping under its 200-day average. The curve has a steep slope, as the S&P 500 took roughly two years to notch a 100 per cent advance from its March 2009 lows.
The 200-day moving average now stands at 1,263.47, less than 0.4 per cent below the S&P 500's close on Friday.
"Every time you test a resistance or support level, you make it weaker," said Nicholas Colas, chief market strategist of the ConvergEx Group in New York. "It's almost like a piece of metal. Every time you hit it, it grows more fragile and that's why people are really worried the third or fourth time."
After three straight days of declines, the S&P 500 fell 0.24 per cent for the week and finished on Friday at 1,268.45 — its seventh decline in the last eight weeks.
The Dow industrials lost 0.58 per cent for the week, closing on Friday at 11,934.58, while the Nasdaq Composite rose 1.39 per cent for the week to end at 2,652.89. The Nasdaq is just fractionally higher for the year, while the Dow and the S&P 500 are both still solidly in the black for 2011.
The next two weeks, before quarterly earnings season starts in earnest, could be marked by wild swings like the ones seen recently. On Thursday, after a market-friendly headline out of Greece, the S&P 500 posted its strongest comeback in almost a year, on days when the benchmark has fallen more than 1 per cent.
From its session low on Thursday, the S&P 500 climbed more than 20 points into the close. The Dow's swing covered 233.79 points from its intraday low to session high on Thursday.
But buying interest waned Friday. Aside from doubts about the passage in Athens' Parliament of higher taxes and service cuts, weak Italian banks also are scaring investors.
The Federal Reserve on Wednesday gave a bleak outlook on the economy, lowering its forecasts for GDP growth for both 2011 and 2012. And Fed Chairman Ben Bernanke found it hard to explain the sources of a so-called economic "soft patch" that seems to have become pervasive.
SUMMER STORM OF DATA
Besides the weekly jobless claims numbers, housing and manufacturing data will attract the most attention this week.
The S&P Case-Shiller April home prices index on Tuesday and the National Association of Realtors May pending home sales index on Wednesday could confirm the housing market's double dip.
Factory activity grew in May at its slowest pace since September 2009, according to the Institute for Supply Management, and Friday's ISM number for June is expected to drop to 51.9, indicating an even slower rate of growth.
New applications for unemployment insurance on Thursday are expected to land above 400,000 for a 12th straight week, according to economists polled by Reuters.
Personal income and consumption, out Monday, are expected to tick higher in May. Consumer confidence, out Tuesday from the Conference Board, is forecast at a June reading of 60.5, just a touch lower than May's 60.8, a Reuters poll showed. Despite a recent string of weak data in May, a sharp drop in crude oil prices is expected to buoy consumer confidence.

Jumat, 24 Juni 2011

Judge calls Niko bribe conviction 'embarrassment to all Canadians'

By Rebecca Penty and Dan Healing, Postmedia News June 24, 2011 7:51 PM

Niko Resources has curtailed spending in Bangladesh in recent years because of the dispute over its well blowout in 2005 that resulted in the government withholding $27 million in payments.

CALGARY — Bribes made by Niko Resources Ltd. have cast a "dark stain," a judge said Friday afternoon, while accepting a $9.5-million negotiated penalty against the company.
"It is an embarrassment to all Canadians," said Justice Scott Brooker after Niko pleaded guilty in Court of Queen's Bench to bribing a Bangladeshi minister with the use of a vehicle and a trip to Calgary and New York in 2005.
Niko was also placed on probation for three years under an agreement between Niko and the Crown prosecutor. It agreed to pay a fine of $8.26 million plus a 15 per cent victim surcharge.
The Calgary-based company pleaded guilty to one charge under Canada's Corruption of Foreign Public Officials Act, laid after a six-year RCMP probe.
An agreed statement of facts shows the bribes were paid to junior energy minister A.K.M. Mosharraf Hossain following explosions at a Niko drilling site in 2005, at a time when Hossain was to determine what compensation should be paid to villagers.
According to the statement, a new Toyota Land Cruiser, purchased by Niko, was delivered to Hossain's house.
Hossain and his family also travelled to Calgary to taken in the 2005 Gas and Oil Expo event and to New York to visit family at the expense of Niko, the statement says.
Hossain was fired when the transactions were revealed in Bangladesh a short time later.
Niko stock traded as low as $61.55 on the Toronto Stock Exchange Friday before recovering to close at $62.85, off $2.07. The company's shares have fallen about 40 per cent this year after posting a 52-week high of $114.71 last August.
Niko's shares have been hit by uncertainty over its operating partner's plans for the prolific offshore Indian gas field that provides most of its production, about 177 million cubic feet per day. Since 2002, it has held a 10 per cent working interest in a joint venture with India-based Reliance Industries in the D6 block off the east coast of India.
In 2009, the company announced the RCMP was investigating allegations that Niko or one of its subsidiaries "may have made improper payments" to government officials in Bangladesh.
That same year, anti-corruption watchdog Transparency International called Canada a "laggard" in enforcing an international anti-bribery convention devised in 1997 under the Organization for Economic Co-operation and Development.
To that point, only one Canadian firm, Hydro Kleen of Red Deer, Alta., had been convicted. It was fined $25,000 for bribing a U.S. customs agent.
In a morning note to investors, Raymond James analyst Rafi Khouri said he is maintaining his "underperform" rating for Niko and lowering his 12-month price target to $55 per share from $63.
He recommended shareholders switch to other international stocks with better prospects.
"While we do not expect that issues such as bribing foreign officials to have any impact on the potential presence (or non-presence) of oil and/or gas in any of the company's lands, we do view this as another negative data point on the company's credibility following the recent 24 per cent reduction in reserves," he said.
"As such, we expect that capital markets will further move Niko into that famous 'show me' category, especially given current market sentiment . . .
"We are thus opting to increase our risking of the company's exploration lands to reflect our expected further negative market sentiment on the back of this guilty plea, with a goal to revisit our risking as the company gets closer to spudding its high impact Indonesia wells later this year."
Khouri is the only analyst in a Bloomberg survey of 14 to advocate selling the stock — 10 suggest buying, three have it as a hold and the consensus target price of 13 analysts is $104.69.
Niko listed production from Bangladesh in the quarter ended Dec. 31, its fiscal third quarter, at 71 million cubic feet of natural gas equivalent per day.
It has curtailed spending in the country in recent years because of the dispute over its well blowout in 2005 that resulted in the government withholding $27 million in payments.
According to its third-quarter report, the dispute remains in legal limbo.
Niko also has oil and gas exploration operations in Pakistan, Kurdistan, Indonesia, Madagascar and Trinidad and Tobago.
rpenty@calgaryherald.com

U.S. regulators investigating Google over search

Agence France-Presse June 24, 2011 6:56 PM

Google said on its Official Google Blog that it received "formal notification from the U.S. Federal Trade Commission that it has begun a review of our business."

Photograph by: Nicholas Kamm, Getty Images

WASHINGTON - U.S. regulators have launched a probe into Google's lucrative search and advertising business in a move that could pose the most serious legal challenge yet to the Internet giant.
Google confirmed the U.S. Federal Trade Commission (FTC) inquiry in a blog post and a filing with the U.S. Securities and Exchange Commission (SEC) and expressed confidence it could withstand the scrutiny.
"Yesterday, we received formal notification from the U.S. Federal Trade Commission that it has begun a review of our business," the Google blog post said.
The Mountain View, California-based company, which controls around 65 per cent of the U.S. Internet search market and earns billions from search-related advertising, said it was "still unclear exactly what the FTC's concerns are."
But in the SEC filing, Google said it had received a subpoena from the FTC "relating to a review by the FTC of Google's business practices, including search and advertising."
"Google is co-operating with the FTC on this investigation," it said.
According to The Wall Street Journal, the FTC is looking into whether Google is abusing its dominance on the Web and if it "unfairly channels users to its own growing network of services at the expense of rivals."
As it has grown from a scrappy startup into an Internet titan, Google has branched out into various businesses including online mapping, shopping and travel and providing operating systems for mobile phones and tablet computers.
But Google makes most of its money from search-related advertising and that is why an FTC investigation targeting its core business is seen by analysts as a potentially serious risk to the company.
Silicon Valley analyst Rob Enderle compared it to the anti-trust troubles of Microsoft in the 1990s over its dominance of the personal computer industry.
"They're on that non-enviable Microsoft path to being regulated," Enderle said of Google.
"They're the kingmakers," he said. "If you play well on Google search then you're going to get the advertising revenue and if you don't then you won't.
"And that kind of control makes anybody very nervous," he said. "If you're a monopoly and you effectively control the purse strings for any competitors that might come up that could be seen as excessive control and restriction of trade."
Ed Black, president of the Computer & Communications Industry Association, said the CCIA supports the FTC probe but has "not yet seen the type of credible evidence that would support a charge of abuse of market power" by Google.
"We have some general concern that increasingly, we're seeing antitrust charges manufactured and wielded as a cudgel by companies hoping to find any way to hurt successful competitors," Black said.
According to digital marketing firm eMarketer, Google's share of U.S. search advertising revenue will grow 38.9 per cent this year to $10.92 billion, giving Google a 75.9 per cent share of overall U.S. search revenue.
In the blog post, Google's Amit Singhal stressed that the company is "focused on putting the user first" and "the competition is only one click away."
"Using Google is a choice — and there are lots of other choices available to you for getting information," Singhal said.
He said Google's business principles will "stand up to scrutiny" and that the company was more transparent than other search engines about the algorithms that determine a Web page's ranking in search results.
"We make hundreds of changes to our algorithms every year to improve your search experience," Singhal said. "Not every website can come out at the top of the page, or even appear on the first page of our search results."
Google has drawn increasing scrutiny from U.S. and European regulators as it has grown over the years into an Internet powerhouse.
European Union competition watchdogs opened an investigation in November into whether Google is abusing its power in online search and the U.S. state of Texas is conducting a similar probe.
Two U.S. senators this month announced plans to hold a hearing on competition issues in Internet search and are seeking to have Google chief executive Larry Page or executive chairman Eric Schmidt come to Washington to testify.
In April, the U.S. Justice Department approved Google's entry into the online travel sector with its $700 million purchase of flight data firm ITA Software but it insisted on a number of concessions.
In late March, the FTC reached a settlement with Google over Google Buzz, the social networking tool rolled out last year which spawned a slew of privacy complaints.
In 2008, Google abandoned a plan to forge a joint search advertising partnership with Yahoo!, citing a desire to avert a "protracted legal battle" with U.S. regulators.
Google shares closed at $474.88 on Wall Street, down 1.11 per cent.

TSX falls for third straight session

By John Morrissy, Financial Post June 24, 2011

Canadian stocks fell for the third straight session on Friday as gold prices fell and oil edged up only slightly from Thursday's 4.6 per cent drop.

Photograph by: Chris Hondros/Getty ImageS, National Post

Canadian stocks fell for the third straight session on Friday as gold prices declined and oil edged up only slightly from the previous day's 4.6 per cent plunge.
The S&P/TSX composite index ended down 70.69 points, or 0.54 per cent, to 12,908.89 with additional downside coming from concerns over Europe's sovereign-debt woes.
The Venture composite index slipped 9.55 points, or 0.50 per cent, to 1,905.33 points.
Gold prices fell $19.60 U.S. to $1,500.90 U.S. an ounce, pressuring precious metals producers and the materials subindex, which fell 0.90 per cent.
Goldcorp lost $1.35, or 2.84 per cent, to $46.24 while Barrick Gold fell 50 cents, or 1.16 per cent, to $42.48.
U.S. oil prices added 14 cents U.S. to $91.16 U.S. a barrel, and sending the energy subsector to a 0.66 per cent drop. Prices fell by $4.39 U.S. a barrel on Thursday after the International Energy Agency announced plans to release 60 million barrels onto the market.
Suncor slipped 13 cents, or 0.35 per cent, to $37.01. Canadian Natural Resources fell 1.57 per cent, or 61 cents, to $38.26.
Niko Resources fell $2.07, or 3.19 per cent, to $62.85. It agreed Friday to pay a $9.5-million penalty after admitting it bribed a Bangladeshi minister with the use of a vehicle and a trip to Calgary and New York in 2005.
The Canadian dollar lost 93 basis points to $1.0132.
North American markets got a bit of good news in an upbeat report on U.S. durable goods orders, which rose faster than expected, but that was not enough to overcome worries about European sovereign debt after Moody's Investors Service said it may downgrade 13 Italian lenders.
The Dow Jones industrial average fell 115.42 points, or 0.96 per cent, to 11,934.58, while the Nasdaq composite index lost 33.86 points, or 1.26 per cent, to 2,652.89.
After a volatile week of trading — in which stocks were buffeted by fears of Greek debt default, plunging oil prices and a dimmer view on U.S. economic growth from U.S. Federal Reserve chairman Ben Bernanke — the week ahead offers little respite.
"European markets will dominate global concerns next week and there are three key factors to watch," said Scotia Capital economists Derek Holt and Karen Cordes.
"One is that Greek politicians will vote Tuesday on whether or not to approve further austerity equalling 78 billion euros worth of cuts, not to mention privatization efforts and a so-called 'crisis levy' on wages," they said.
"Also on tap for European markets are a series of Italian government bond auctions on Tuesday following warnings by S&P and Moody's that Italy's debt rating may be cut.
"Far and away the largest risk emanating from Asian markets will be China's manufacturing sector purchasing managers' index on tap for Thursday evening. Consensus is expecting a print just over the critical divide between expansion and contraction."
In Europe, London's FTSE added 23.34 points, or 0.41 per cent, to 5,697.72, while the Paris CAC rose 2.99 points, or 0.08 per cent, to 3,784.80 and Frankfurt's DAX slipped 28.06 points, or 0.39 per cent, to 7,121.38.
Twitter.com/johnmorrissy

Niko bribery case reveals Canada's lagging corruption laws

By Dan Healing, Postmedia News June 24, 2011 8:02 PM

Penalties levied against Niko Resources on Friday show that Canada's anti-corruption laws are gaining strength but are still weaker than similar laws in the United States, observers said.
The case, settled by a guilty plea negotiated by Niko and prosecutors following a six-year investigation by the RCMP, is only the second conviction under the Canadian Corruption of Foreign Public Officials Act, passed in 1998.
In the previous case, Red Deer-based Hydro Kleen Systems Inc. was fined $25,000 in 2005 for bribing an American customs official to expedite its work visas and flag rival firms in a database to make it difficult for them to enter the U.S.
The $9.5 million Niko has agreed to pay, plus three years of probation, settle charges that it bribed a Bangladesh official who was responsible for deciding compensation for villagers after a well blowout in 2005.
James Klotz, president of Transparency International Canada, said the fine isn't enough, but it's a start.
"It's a lot of money, but it pales in comparison to the $800 million in fines that has been levied in the U.S.," he said at court. "Other countries are starting to levy hundreds of millions of dollars. But it's a start.
"Even in the U.S., when they started prosecutions under the Foreign Corrupt Practices Act (of 1977), the fines started off small and ratcheted up. Hopefully, now corporate Canada is aware the fines are going to be significant before participating in corruption and that judges will continue to ratchet up the fines."
Dana Coffield, president and chief executive of Gran Tierra Energy Inc., agreed that the American law is more feared.
The Calgary-based company has operations in Brazil, Colombia, Peru and Argentina and is listed on exchanges in both Canada and the United States.
"In the U.S., there are $100-million penalties out there, regularly," said Coffield. "I noticed in some of the articles how unusual it is in Canada for prosecution to take place, while in the U.S. it's not only common, but the fines and penalties can be devastating, not only to the companies but to the individuals."
He said all staff have to take annual training to understand the U.S. act and Gran Tierra's ethical standards.
"We have zero tolerance for this."
Peter Bowal, a law professor in the Haskayne School of Business at the University of Calgary, said the lack of convictions under the Canadian act means there are few guidelines on sentencing.
He added the level of fine shows the court considers the offence to be serious, with the involvement of third parties affected by Niko's blowout likely an aggravating factor.
"Our act is a little bit different than the Foreign Corrupt Practices Act in the U.S.," he said. "They are a little more aggressive on it there."
He said the Canadian law is straightforward but isn't enforced very often because bribery is difficult to prove and the RCMP and federal government "aren't really equipped to be world cop."
Under the act, bribery is considered more serious than "facilitation payments," Bowal said, with the latter defined as payments made to get something done that would happen anyway, such as a fee to jump to the front of a line.
Both practices are forbidden at Calgary-based Talisman Energy Inc., said spokesman David Mann, adding that all employees must take ethics training at least once a year.
"Once a year, there's a half-hour to 40-minute online course we have to take, with videos and examples and questions, plus there's an affidavit you have to sign that says you haven't done anything to contravene the company policy," he said. "Plus there's a section on bribes and facilitation payments made to foreign officials."
Talisman has operations around the world, including in Southeast Asia and Latin America.
Haskayne associate dean Loren Falkenberg said the Niko fine is a "wake-up call" for Canadian businesses operating abroad.
"Resource companies are in a very difficult position because they have to go to where the resources are," she said. "That's not always where the most stable, efficient economies are. They have a huge impact on the community."
Falkenberg said that although some cultures encourage bribery, the practice leads to inefficiency and ultimately is bad for business.
With a file from Rebecca Renty, Calgary Herald
dhealing@calgaryherald.com
twitter.com/healingslowly

Kamis, 23 Juni 2011

Lagarde urges IMF reform as she seeks top job

Agence France-Presse June 23, 2011

French Finance Minister Christine Lagarde gives a statement to the press after leaving IMF headquarters after a meeting in Washington, D.C., Thursday, June 23, 2011.

Photograph by: Olivier Douliery, Abaca Press/MCT

WASHINGTON - French Finance Minister Christine Lagarde called Thursday for further reform of the International Monetary Fund as she completed a round of interviews with IMF officials for the top job.
Speaking to reporters after a three-hour interview with the IMF executive board, Lagarde noted she had in recent days had "extensive" one-on-one discussions with its 23 directors.
"It's now for the membership to decide," she said. "I believe the Fund should be more responsive, certainly more effective and more legitimate.
"And that really entails many potential improvements but also continuation of the reforms that have been undertaken by my predecessor," she said, referring to scandal-tainted fellow countryman Dominique Strauss-Kahn.
The position of IMF managing director was left vacant after the May 18 resignation of Strauss-Kahn to fight charges of sexually assaulting a maid at a New York hotel.
Switching to French at the request of French reporters, Lagarde said her meeting with the board was "an opportunity to discuss with them the vision I have for the Fund."
She said the IMF was a "remarkable" institution with an "exceptional staff."
"It should become more responsive, more involved, more legitimate with regard to the integration of its 187 members. In any case, that would be my goal," she added.

Wind Mobile shakes up upper management

By Jamie Sturgeon, Financial Post June 23, 2011

Ken Campbell, CEO, WIND Mobile, left, and Anthony Lacavera, Chairman, Globalive and WIND Mobile.

Photograph by: Brett Gundlock, National Post

TORONTO -- Wind Mobile is reorganizing its management ranks as the upstart wireless carrier prepares to challenge Canada's major telecommunications players.
The company announced Thursday that Wind Mobile chairman Anthony Lacavera will take over as chief executive from Ken Campbell, brought on for the firm's launch in late 2009.
At the same time, a new chief operating officer, Gianluca Corti, has arrived from Europe.
Campbell is steeped in international experience running mobile companies. But with profitability dead at the low end of Canada's $16.8-billion mobile market as competitors beat each other senseless, and a bigger battle for bundled in-home and wireless services emerging, Wind finds itself at another crossroad.
"Ken has done a great job of getting this off the ground," said Lacavera, chairman of Globalive Communications Inc., the holding entity of Wind.
But he adds: "Clearly we can only compete by being a quad-play. (And) I need to build this converged company. The big opportunity for us now is to take advantage of our wireless network and actually selectively build out fixed-line infrastructure."
By necessity, Lacavera has latched onto a broader vision, one that means wireless alone will no longer cut it if the telecom upstart - already coping with a billion dollars in debt - is to succeed in becoming a competitor rivalling industry giants such as Rogers Communications Inc., he says.
The plan, in short, is to transform the mobile operator of 300,000 or so subscribers into a full-weight service provider of household Internet and video services that can be tied up with Wind's mobile offering.
The business plan is modelled on the strategic path cut by Wind Telecomunicazioni SpA, an Italian integrated carrier already lending its brand to the Canadian operation that was acquired this spring by global conglomerate VimpelCom, which also inherited Lacavera's venture.
To call the plan ambitious would understate the endeavour, perhaps dramatically. There no assurances that the local startup's new partners are in it for the long haul. Wind has also bled more cash than initially estimated.
"VimpelCom's got a number of other properties that they have to look at, and Canada isn't one of the major ones," said Peter Rhamey, analyst at BMO Capital Markets. "And globally, it is not situated in an area that is consistent with the others."
Competitors such as Public Mobile and Telus Corp. are also making noise of continuing their legal battle over Wind's ownership structure, which they say skirts foreign-ownership restrictions, a threat Lacavera acknowledges still exists. Last month's Federal Court of Appeal win though has given Wind the most certainty it has had at least since launch, perhaps ever.
"We're in the clear for the short term here and that's given our investors more confidence to accelerate," Lacavera said.
Operationally, on top of fresh cash the new push will require Herculean energy and dedication, something Lacavera aims to provide. But also a strong injection of additional know-how.
Enter Gianluca Corti, the head of operations at the Italian Wind who's been recruited to Canada. Lacavera calls it a "massive win" for Globalive while it appears proof VimpelCom is committed to the venture, the only operation in the Americas it has a stake in.
Wind Telecomunicazioni has a wireless base of 22 million subscribers, and has moved in recent years to sell the "quad" product bundle, tying mobile into home Internet, phone and an IP-based TV product. The carrier has two million Internet customers — more than any provider in Canada save Bell Canada Inc., and roughly the same in home telephony. Its recently added IPTV product also continues to grow.
All four products are being increasingly packaged together by Canadian incumbents Rogers, Bell and Telus. Quebecor Inc.'s cable subsidiary Videotron has also anchored its new wireless offering into its bundled portfolio.
The strategy puts independents such as Wind, Public Mobile and Mobilicity at a sharp disadvantage, Lacavera said. "If you got into the business to just offer wireless services, you're in trouble. Consumers want high-speed data connections and consumers want content. Having an offering that includes those things is very important long term."
The model fits well with Globalive's existing structure. Wind Mobile is the largest arm of Globalive, a business founded by Lacavera that has sold long-distance phone and Internet services for several years under the Yak brand. The home-phone base consists of 800,000 customers, he said. The re-sale Internet business is considerably smaller at under 30,000.
Lacavera's wireless operation has a capital budget of between $1.6 billion and $1.7 billion over 10 years, financing Wind predominantly secured through its original partner, Cairo-based Orascom, the Egyptian conglomerate bought by VimpelCom. Wind now requires another a few hundred million dollars from VimpelCom to start installing equipment that will broaden the fixed-line reach of Yak, a brand which will be subsumed under the Wind banner, too, at some point.
The executive did not disclose timetables but said the Canadian team, including Corti, was finalizing arrangements with VimpelCom this month.
Not surprisingly, skepticism is present within the corridors of Canada's capital markets, the same financiers and institutions who refused to support Globalive when it was looking for domestic funding solutions in 2008, forcing Lacavera to find partners abroad and subsequently challenge the laws of the country.
"You always have a fully funded business plan until it's not fully funded, if you know what I mean," said one Bay Street watcher.
BMO's Rhamey said Wind's fate resides in its ability to show its new masters it's hitting operational targets, noting that average revenue per subscriber has trended in the wrong direction recently. Wind will have to improve that metric to secure VimpelCom's continued patronage. But he concludes, "So long as they see an opportunity they'll continue funding it."
"No one believed we'd be in wireless either, we were dismissed by the Canadian investment community as not being a viable plan," Lacavera countered. "And here we are past 300,000 subscribers, a thousand a day coming over."
To be sure, "there's going to be big challenges and obstacles. These are very well run companies so the competition is going to be stiff," he says. "But we're excited to compete."

Markets rebound on news of Greek austerity deal

By John Morrissy, Financial Post June 23, 2011

Canadian stocks pared earlier deep losses Thursday on reports that Greece had struck an agreement with the European Union and International Monetary Fund for a new five-year austerity plan.

Photograph by: TSX, TSX

Canadian stocks pared earlier deep losses Thursday on reports that Greece had struck an agreement with the European Union and International Monetary Fund for a new five-year austerity plan.
The reports, quoting sources close to talks aimed at saving Greece from default on its debts, lifted the S&P/TSX composite from declines that earlier in the session had shaved 221 points from the benchmark index.
By the end of the session, the TSX posted a loss of 80.98 points, or 0.62 per cent, to 12,979.58.
The index had rallied Monday and Tuesday on speculation Greece will pass austerity measures to address its debt crisis. But the gains began to slip away Wednesday after U.S. Federal Reserve chairman Ben Bernanke cut his outlook for U.S. growth and made no mention of further stimulus to kick-start the faltering American economy.
Declines were exacerbated in early trading Thursday on weak U.S. labour data and news that the International Energy Agency would release 60 million barrels of oil in the coming month in response to disruption of supply from Libya.
Energy stocks were the among the hardest hit on the TSX Thursday, as U.S. oil prices plunged 4.6 per cent, or by $4.39 U.S. a barrel, to $91.02 U.S.. The energy subindex lost 0.96 per cent, led by declines in Suncor, down one per cent to $37.14 and Canadian Natural Resources, off 0.72 per cent, or 28 cents, to $38.87.
"A combination of events has come together to create a near-perfect storm for energy markets, particularly crude oil and gasoline," said CMC Markets Analyst Colin Cieszynski.
"First, indications from the U.S. Fed indicating that there are no immediate plans for additional stimulus (QE3) beyond the end of QE2 has taken a lot of pressure off of USD sparking a big rebound rally.
"Second, more signs have appeared overnight to suggest that the global economy and potential demand for resources continues to slow. China's flash initial manufacturing PMI for June came in 50.1, just barely in expansion territory, while U.S. jobless claims were worse than expected again (429K versus street 415K) and still well above the key 400K level.
"Third, the IEA has agreed to release 60 million barrels from stockpiles over the next month to replace production lost from the Libyan civil war, with half expected to come from the U.S.. This appears to have been the straw that broke the camel's back for energy markets today."
Materials stocks also fell — although they rose from earlier losses — as gold prices shed $32.90 U.S. an ounce and gave back almost all of the advance made in the previous seven straight sessions of gains, settling at $1,520.50 U.S..
Goldcorp fell 1.27 per cent to $47.59, while Barrick Gold slipped 1.35 per cent to $42.98.
But the worst performer on the day turned out to be financials, whose sub-index lost 0.95 per cent of its value. Royal Bank lost 1.32 per cent to $53.82 and CIBC fell 0.61 per cent to $77.62.
Research In Motion led gainers, rising 5.54 per cent, or $1.53, to 29.14. TMX Group also rose, up $1.05, or 2.37 per cent, to $45.30 after rival bidders for the company both sweetened their takeover offers.
The TSX composite had 67 advancing stocks, 190 decliners and three unchanged.
Global markets were hurt Thursday by signs that the U.S. economy continued to soften.
The number of Americans filing new claims for unemployment benefits rose last week, suggesting little improvement in the stagnant labour market after employment stumbled in May. Meanwhile, U.S. new home sales fell less than expected in May but remained depressed.
Falling on the heels of Bernanke's dimmer outlook for U.S. growth on Wednesday, investors sent the Dow Jones industrial average down 0.49 per cent, or 59.67 points, to 12,050.00.
The Nasdaq composite index rose 17.56 points, or 0.66 per cent, to 2,686.75 as shares in Apple Inc., rose 2.67 per cent, or $8.62 U.S., to $331.23 U.S..
Europe's major indexes all ended in the red, with London's FTSE off 1.71 per cent, the Paris CAC down 2.16 per cent, and Frankfurt's DAX down 1.77 per cent.

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