Toronto Stocks Plunge, Pressured By Resource Issues

Toronto Stocks Plunge, Pressured By Resource Issues

Tuesday, January 4, 2005, 4:15 PM EST (Thomson Financial Corporate Group): Canadian shares posted a sharp fall in their first day of trading for 2005. Specifically, gold, energy and material shares tumbled, following steep declines in commodities yesterday. Also, the U.S. dollar rallied against the loonie and the euro. South of the border, minutes from the Federal Open Market Committee's December 14 meeting indicated concern that the greenback's recent depreciation, higher energy costs and a possible slowdown in productivity growth may boost inflation. Also, some bearish tech research pressured stocks on both sides of the border.

* The S&P/Toronto Stock Exchange Composite Index tumbled 103.59 points,
or 1.12%.

* Gold shares and the precious metal tumbled, as the U.S. dollar rallied
against the euro. Oil prices rebounded somewhat; although, energy
stocks plunged, playing catch-up with yesterday's steep decline in
crude prices. Warmer weather in the U.S. Northeast has tempered buyer
enthusiasm for the commodity.

* In corporate reports, Domtar and Tembec entered into a deal to
restructure their northeastern Ontario sawmill operations. Domtar will
close its sawmill in Chapleau in early March, and the boiler and kiln
facilities will be sold to Tembec. Also, Domtar sold about 104,400
acres of timberlands in New York to the Lyme Timber Co. of Hanover,
N.H., and the Nature Conservancy. Separately, in research, CIBC raised
its price target on Ipsco to US$53 from US$43.50.

* Technology stocks turned sharply lower, following the U.S. market. Dell
tanked, after Raymond James cut the stock to "outperform" from "strong
buy" citing share appreciation. Also, Bear Stearns said it believes
software sector valuations are too lofty given a moderating outlook.
Meanwhile, Intel declined, despite an upbeat fourth-quarter forecast
from Prudential.

* In domestic reports, Nortel Networks said that the New York Stock
Exchange provided the firm with an additional three months to file its
2003 annual report with the Securities and Exchange Commission. The
move will allow the firm to continue to trade on that exchange. Turning
to research, Smith Barney initiated coverage of Research In Motion with
a "hold" rating. The brokerage said in its research note that although
the firm's premium valuation limits sustainable upside, near-term
earnings momentum from the Fast 100 and smartphone initiatives are also
expected. Research In Motion plunged.

* Financial issues managed modest gains. Sun Life Financial and its
subsidiary Sun Life Assurance Company of Canada announced the
completion of a reorganization plan under which most of Sun Life
Assurance's asset management businesses were transferred to a newly
incorporated subsidiary of Sun Life Financial Inc.

* Within the industrial group, Bombardier Transportation received an
additional order to provide 100 high-capacity trains AGC type to the
French National Railways. The deal is valued at approximately US$474
million.

* In healthcare reports, Dimethaid Research was very active after that
firm and Solvay Pharma entered into an amended agreement to market and
sell arthritis medication Pennsaid in Canada. Solvay withdrew its
previously announced notice of termination. Still, Biovail tumbled,
after that firm, along with Forest Labs, was named as a defendant in a
suit that alleges the firms attempted to monopolize the Tiazac drug.
Forest Labs distributes Tiazac in the U.S. under license from Biovail.

* Turning to staple reports, independent proxy advisory firms
Institutional Shareholder Services and Fairvest both recommended that
Coors and Molson shareholders vote in favour of their proposed merger.

* On the U.S. economic front, November factory orders leapt 1.2%,
following an upwardly revised 0.9% advance in October. Orders were
expected to climb 1.0% in November.

-- 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 http://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 -- Jan. 4


Source: Thomson Financial Corporate Group

Web site: http://www.thomsonfinancial.com/
http://www.irchannel.com/


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