News

Investors drove the Toronto Stock Exchange to a record close Friday, making the most of takeover speculation and shaking off U.S. inflation fears.

The S&P/TSX Composite Index rose 78.97 points or 0.58 per cent to close at 13,578.62. In total, the index was up 153.6 points through the week, a gain of about 1.1 per cent over five trading sessions.

Cott Corp. was the Toronto Stock Exchange's biggest winner Friday. Shares climbed $3.72 or 25 per cent to $18.44 after the private-label soft drink maker said it has responded to interested parties that have approached it after Cadbury Schweppes PLC announced it would split its confectionery and Americas beverage businesses.

Meanwhile, the shares of Agricore United jumped $3.12 or 19 per cent to $19.53 on the TSX after Canada's largest grain company said an enriched offer from Saskatchewan Wheat Pool is superior to that of rival suitor James Richardson International Ltd.

After choppy morning trading, U.S. markets eked out gains in the afternoon. The Dow Jones Industrial Average was up 59.17 points or 0.47 per cent to 12,612.13 The tech-heavy Nasdaq Composite Index, meanwhile, rose a slender 11.62 points, or 0.47 per cent, to 2,491.94.

Merck & Co. led a rally in health-care shares after the drug maker's first-quarter profit beat projections. The U.S. drug giant jumped $3.85 (U.S.) to $50.21 on the New York Stock Exchange. The 8.3 per cent surge represents the biggest advance since February, 2005, and gave Merck the best performance on the Dow average.

SLM Corp. climbed on a report that buyout firms may purchase the biggest U.S. provider of student loans for more than $20-billion. Known as Sallie Mae, the financial services firm jumped $6.01, or 15 per cent, to $46.76. Blackstone Group may be a bidder for the company, the New York Times reported.

The U.S. Labour Department reported prices paid to U.S. producers rose more than forecast in March, led by a jump in energy costs that is eroding consumer confidence. The Reuters/University of Michigan's preliminary consumer sentiment index declined to an eight-month low of 85.3 in April as Americans predicted inflation would accelerate.

With files from Associated Press and Reuters

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BCE GETS A BOOST

Analyst Patrick Grenham of Citigroup Global Markets Inc. has boosted his 12-month target price for BCE Inc. to $44 a share from $35, while maintaining the “buy” recommendation on shares of the telecom company he had before rumours of a possible takeover of BCE surfaced.

“Recent press reports that a consortium is preparing a takeout bid for Bell Canada may or may not be true; however, it is incumbent on us to look at the possible economics of a takeout to see if a bid is feasible and, if so, if the pressure on the managers of Bell would be enough for them to leverage the balance sheet,” Mr. Grenham said in a report.

“When we do this, we conclude that the answer is yes to both questions and for that reason, we raise our target price to $44 a share,” he added.

BCE shares are currently trading at xxxx on the Toronto Stock Exchange.

Some big BCE shareholders have become frustrated with BCE's lacklustre share price performance and the Ontario Teachers Pension Plan, BCE's largest shareholders with a 5-per-cent stake, has contacted a U.S. buyout firm to explore the possibility of a bid for BCE.

Angela Barnes

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POSITIVE ON GOLDCORP

Bay Street is bullish on Goldcorp Inc. — with a few caveats.

On Thursday, the Toronto miner held an investor's day and received generally positive reviews.

“Overall, we were impressed with the significant internal growth opportunities,” particularly Goldcorp's projects in Mexico and north Ontario, said Tony Lesiak of UBS Investment Research.

The analyst has a “buy” rating on Goldcorp shares and has increased his 12-month price target to $37 (U.S.), up from $36.50.

“We came away with a continued bullish view,” agreed analysts Steven Butler and John Vinnai of Canaccord Adams. “Goldcorp remains our preferred senior North American gold equity.”

Canaccord has a “buy” rating on shares and a 12-month price target of $35.

Despite the upbeat reviews, there are some concerns. Mr. Lesiak notes that the company's recent shopping spree may be even more dilutive than first anticipated and has lowered his per-share earnings targets for fiscal 2007 and 2008. Goldcorp spent acquired rival Glamis Gold Ltd. last year for $8.6-billion.

In trading Friday, shares rose 87 cents to $26.57 on the New York Stock Exchange.

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TIME TO CASH IN ON TALISMAN

Scotia Capital is advising investors to take profits on high-flying Talisman Energy Inc.

Shares of the Calgary oil and gas producer were up $1 this week to a close of $21.98 Thursday on the Toronto Stock Exchange on rumours of changes in the executive office.

“For investors with a near-term trading orientation, we would be inclined to take profits on the stock,” said analyst Greg Pardy in a note Friday. “We see little in the way of logic associated with the Jim Buckee [Talisman's chief executive officer] retirement rumour which fuelled the stock's 4.2 per cent appreciation yesterday.”

In trading Friday, Talisman shares were off 2 cents to $21.96.

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TSX PUSHES ITS WAY TO ANOTHER RECORD HIGH

Investors shrugged off inflation and interest rate fears today, pushing the Toronto Stock Exchange's main index to a record high.

At noon, the S&P/TSX composite index, was up 26.52 points, or 0.20 per cent, to 13,526.17.

Strength in materials and energy issues helped lift Canada's benchmark index. Four of the TSX index's 10 main groups were higher, as the resource-laden materials group propped up the broader market with a 0.9 per cent gain. Relatively tame economic data out of the U.S. also bolstered investor confidence, helping ease concerns about renewed interest rate hikes.

Despite the modest early gains, Friday will likely end up being a day of flat trading ahead of the weekend, forecast Michael Sprung, president at Sprung & Co. Investment Counsel.

“It's going to be tough to keep this market going higher in light of some of the inflationary concerns that are beginning to present themselves,” Mr. Sprung said.

Fears over inflation rattled markets on both sides of the border earlier this week after minutes released by the U.S. Federal Reserve hinted at new interest rate hikes to quell inflation. A U.S. government report this morning showed that rising energy costs pushed producer prices up by a larger than expected 1.0 per cent in March.

In the materials sector, Goldcorp Inc. was up 37 cents, or 1.3 per cent, at $29.45, while Teck Cominco Ltd. gained 49 cents, or 0.6 per cent, to $82.76.

The energy sector rose 0.5 per cent as U.S. oil topped $64 a barrel amid concerns over refinery glitches and a drop in U.S. gasoline stocks ahead of the summer driving season. Shares of Canadian Natural Resources Ltd. were up $1.05, or 1.6 per cent, to $67.75.

U.S. markets were mixed at mid-day. The Dow Jones Industrial Average was up 26.5 points or 0.21 per cent to 1,2579.62. The tech-heavy Nasdaq Composite Index, meanwhile, slipped 0.6 per cent or 1.51 points to 2,478.81.

With files from Reuters.

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BAY STREET'S TAKE ON THE NEWSPAPER BIZ

The financial results of rival newspaper proprietors have received black and white reviews from Bay Street.

CanWest MediaWorks Income Fund second quarter results fell short of analyst Drew McReynolds' expectations. The big city daily newspaper trust reported revenues and earnings before interest, taxes depreciation and amortization, or EBITDA, of $278-million and $56.2-million, missing the RBC Capital Markets analyst's targets of $283.7-million and $58.9-million respectively.

Mr. McReynolds has a “sector perform” rating on the Toronto-based income trust and a 12-month price target of $7.50. Trusts units were down 18 cents to $8.47 in trading on the Toronto Stock Exchange this morning.

In contrast, Glacier Ventures International Corp. posted fourth quarter results “sharply ahead” of David McFadgen's estimates. The Vancouver newspaper and trade publisher reported revenue and EBITDA of $53.1-million and $10.6-million, soundly trumping the Sprott Securities Inc. analysts' projected $42.5-million and $6.2-million forecasts.

“There is substantial upside for Glacier Ventures through integrating all of its operations acquired over the past 12-24 months,” said Mr. McFadgen.

The analyst has a “buy” rating on the shares with a target price of $3.60. In Toronto trading today, the stock was down 4 cents to $3.26.

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HUNTING FOR DIRECTION

The Toronto Stock Exchange's main index struggled for direction in early trading today, as investors mulled over U.S. inflation figures and potential interest rate hikes.

Shortly after the open, the S&P/TSX composite index, was down 5.62 points, or 0.04 per cent, at 13, 494.03. Overall, four of the TSX index's 10 main groups were up in early trading.

Shares of mining and materials companies were among the early gainers. Lundin Mining Corp. was up 25 cents $14.69. UTS Energy Corp., meanwhile, rose 24 cents to $4.60.

Wall Street had a flat opening as investors remained cautious following U.S. inflation data. Rising energy costs pushed producer prices up by a greater-than-expected 1.0 per cent in March, a the U.S. Labour Department reported.

An hour after the market open, the Dow Jones Industrial Average slipped 8.12 points or about 0.07 points to 12,545.24 points. The Nasdaq Composite Index, meanwhile, was down 8.77 points to 2,471.55, a loss of about 0.35 per cent.

In Europe, shares in Cadbury Schweppes Plc surged 4.4 per cent to top the FTSE 100 gainers after Cott Corp. shares were suspended from trading in Toronto. The Wall Street Journal reported that Cott, a company that makes private-label drinks, was talking with private equity firms about joining operations with the Cadbury Schweppes beverage arm.

With files from Reuters and Associated Press.

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LUXURY GOODS GET THEIR OWN INDEX

Investors with a taste for Tiffany diamonds, Burberry handbags and Dior perfume now have a stock index to call their own.

Merrill Lynch & Co. today launched an index to track stocks associated with global luxury and lifestyle brands. The ML LifeStyle Index includes a wide range of high-end brand names all catering to the wealthy consumer, a list that includes auto maker Porsche AG, retailer Saks Inc. and travel cruise firm Carnival Plc.

The index will fluctuate from at least 15 to at most 50 stocks and may be changed during bi-annual reviews, which will be conducted on the first trading day of February and of August.

Historical returns indicate stocks catering to the wealthy is a good place to invest. The average out-performance of the index versus the MSCI World Consumer Discretionary index currently stands at 7.7 per cent since 2000.

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MERCK MAKES INVESTORS SMILE

Merck & Co. is a stock market darling today following revised guidance from the drug maker.

Late Thursday, Merck said it expects to report first-quarter earnings of 78 cents (U.S.) per share. Excluding restructuring charges, it said it expects to record 84 cents per share in quarterly earnings.

Wall Street, on average, expects 63 cents per share, excluding special items, according to a Thomson Financial analyst survey.

For the full year, Merck raised its earnings-per-share guidance to a range of $2.60 to $2.75 from prior guidance of $2.40 to $2.55. Excluding restructuring charges, it expects full-year earnings of $2.75 per share to $2.85, up from prior guidance of $2.55 to $2.65. Analysts are looking for $2.65 in annual earnings per share, excluding restructuring charges.

Merrill Lynch & Co. Inc. raised its price estimate for Merck shares 8 per cent to $54, citing “surprising upside'” in a report published today. Merrill has a “buy” recommendation on the stock. Goldman, Sachs & Co. raised its recommendation to “neutral” from “sell.”

Meanwhile, Roopesh Patel of UBS Investment Research has boosted his 12-month price target to $52.00 (U.S.), up from $48.00 following the improved forecast. The analyst is maintaining his “neutral” rating on shares, however, and is seeking more clarity on the sustainability of profit growth.

Merck shares climbed $1.66, or 3.5 per cent, to $48.02 in pre-market trading after closing at $46.36, up 71 cents, on the New York Stock Exchange Thursday.

With files from Associated Press.

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EARLY MARKET SIGNALS MIXED

With the Toronto stock market's key index at an all-time high, global indicators were mixed for North American trading early Friday.

Wall Street futures suggested a flat opening as investors remained cautious ahead of U.S. inflation data and next week's corporate earnings reports.

Oil prices rose and key European indexes were up in early action.

Tokyo's stock prices dropped amid selling in banks, steel and carmakers, while Hong Kong shares were weighed down by developers' losses as most Asian stocks declined. Jakarta hit a record high.

Japan's benchmark Nikkei 225 index declined 176.47 points, or 1.01 per cent, to finish at 17,363.95 on the Tokyo Stock Exchange.

In Hong Kong, shares were dragged down by developers hurt by interest rate concerns, but China Life rose on hopes of strong earnings figures. The blue-chip Hang Seng Index fell 39.24 points, or 0.19 per cent, to 20,340.97.

The Canadian dollar opened at 88.2 cents US, up 0.06 of a cent.

- Canadian Press