Resource Stocks Brighten Canadian Market, Despite Tech Weakness

Resource Stocks Brighten Canadian Market, Despite Tech Weakness

Wednesday, December 15, 2004, 4:15 PM EST (Thomson Financial Corporate Group): Canadian shares managed to post healthy gains, thanks to resource strength. A surge in oil prices and greenback weakness boosted energy and gold issues, respectively. Still, technology stocks tanked, dragged lower by Nortel Networks and Research In Motion. South of the border, Sprint and Nextel's merger, positive research on Merck and stronger financial results from Lehman Brother's were in focus.

* The S&P/Toronto Stock Exchange Composite Index advanced 19.80 points,
or 0.22%.

* Oil prices rallied, ending above US$44 a barrel, after data from the
U.S. Energy Information Administration showed a decline in U.S. crude
and heating oil inventories. In corporate reports, Husky Energy set a
2005 capital-spending budget of C$2.5 billion and forecast 2005
production at 325,000-350,000 barrels of oil equivalent a day. Also,
Petro-Canada is resuming output at the Terra Nova oil field off the
coast of Newfoundland, three weeks after an oil spill shut output.

* Gold shares and the yellow metal witnessed a solid session, supported
by greenback weakness against the euro. In corporate reports, Linear
Gold leapt, after Orion initiated coverage on the firm with an
"overweight" rating and C$16 price target.

* Meanwhile, Agrium slumped within the materials sector. That firm and
Unocal settled their Alaska gas dispute. The firms agreed on a new deal
on the sale of natural gas from Unocal's fields in Alaska to Agrium's
Alaska fertilizer plant. Agrium said the agreement will give it more
than US$100 million in benefits. Also, Merrill Lynch downgraded Agrium
to "neutral" from "buy," as the brokerage views the firm's settlement a
"disappointment." Separately, Concert Industries was active, after the
Quebec Superior Court approved the final plan of compromise and
arrangement pursuant to the Creditors Arrangement act of its Canadian
operating subsidiaries.

* Technology issues tanked. Nortel Networks posted a "limited estimated
unaudited" third-quarter loss of US$0.06 a share, which included
US$0.05 a share in charges and an unusual gain of US$0.01 a share. The
firm's revenue declined to US$2.3 billion from US$2.6 billion in the
second quarter; however, Nortel forecast fourth-quarter revenue of
US$2.8 billion to US$2.9 billion. The firm said its 2004 sales figure
may land beneath 2003's total.

* Also, Research In Motion continued to tumble a day after a U.S. appeals
court ruled against the BlackBerry e-mail device maker. Still, the
court said part of an earlier court's ruling was flawed and sent the
case back to a lower court. In research, Scotia cut Zarlink's price
target, while Lehman Brothers downgraded U.S.-based PalmOne.

* Within the telecom group, BCE Inc. said that it expects higher 2005
revenue growth and single digit earnings per share growth. Free cash
flow is expected to be C$700 million to C$900 million for the year. The
firm is also raising its annual dividend by C$0.12 a share to C$1.32 a
share. BCE said it would increasingly shift its business mix more
toward high-growth areas.

* Healthcare issues turned lower, amid mixed reports. MDS Inc. slumped,
despite turning a fourth-quarter profit versus last year's loss. The
firm's operating income arrived at C$0.31 a share, which MDS noted was
partly hindered by a weaker U.S. dollar. Also, some analysts noted the
firm's slow turnaround efforts. Merrill Lynch downgraded the firm to
"neutral" from "buy." On a brighter note, QLT won U.S. Food and Drug
Administration approval for the six-month formulation of its prostrate
cancer treatment, Eligard. Also, Axcan announced positive safety
results from a trial of its key pipeline drug Itax.

* Turning to industrial reports, Calian Technology rallied, after it won
a five-year, C$400 million contract to supply medical personnel to the
Canadian military. Subsequently, Harris Partners lifted the stock's
rating and price target.

* In major U.S. merger news, Nextel Communications and Sprint Corp.
agreed to merge in a deal worth US$35 billion. The new company will
have about 38.5 million subscribers. Also south of the border, Lehman
Brothers' fourth-quarter earnings jumped to US$1.96 from last year's
US$1.71, well above the Thomson First Call estimate of US$1.69. The
firm cited strong revenue in its investment banking, capital markets
and client services units.

* In U.S. economic reports, the Empire State manufacturing index rose to
29.9 in December from 18.8 the prior month, well above the expected
reading of 20.0.

-- Linda.Shea@thomson.com; Thomson Financial Corporate Group



This is Thomson Financial Corporate Group's Canadian Commentary,which is updated twice daily. The information herein is believed to be true and accurate, we take no responsibility for inaccurate information and reserve the right to update our reports. For more financial information at your fingertips, please visit www.irchannel.com. If you have any questions please e-mail James Sang at james.sang@tfn.com or call 646.822.6233 For more information about Thomson Financial visit us on-line at http://www.thomsonfinancial.com/.

PRNewswire -- Dec. 15


Source: Thomson Financial Corporate Group


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