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Midday Business Briefing

Adapting to the strong Canadian dollar: 'Lies, damn lies' and stats Add to ...

Stories Report on Business is following today :

Google reported to be planning China exit

Google Inc. is expected to announce as early as today that it plans to shut down its Chinese search engine. The Financial Times reported this morning that the Internet search giant will also unveil plans for its other operations in China. Google could exit all its businesses in China, the newspaper said, but this was not clear. A retreat from China could hurt Google's stock price, analysts said today, because of the growing importance of China. "It hurts the multiple people who are willing to pay for Google if they don't have the China opportunity," Kaufman Brothers analyst Aaron Kessler told the Reuters news agency.


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Rio Tinto executives on trial in China

Reports from China say four executives of Rio Tinto PLC have pleaded guilty to taking bribes in a high-profile trial. News reports this morning quote a lawyer for one of the men as saying the four officials, including Stern Hu of Australia, as saying they entered pleas. Tom Connor, Australia's Consul General in Shanghai, where the trial is taking place, added that Mr. Hu "made some admissions concerning some of those bribery amounts, so he did acknowledge the truth of some of those bribery amounts," according to the Reuters news agency. Read the story

Health care stocks rise in U.S.

Shares of U.S. insurance companies and hospital groups rose today in the way of the health care overhaul bill passed yesterday. The S&P health care sector index rose about 0.8 per cent after markets opened, while the Morgan Stanley healthcare payor index gained 1.9 per cent. Other companies affected by the bill also rose.


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Obama staked it all on health care

India rate hike surprises

A surprise interest hike by India's central bank late Friday unsettled currency markets today. Citing inflationary pressures, the Reserve Bank of India boosted its benchmark rate by one-quarter of a percentage point, and analysts expect authorities won't stop there. While markets had been expecting a rate hike, they didn't expect it this soon, believing instead authorities would move at the next policy meeting April 20. Also rippling through markets this morning are the ongoing concerns over Greece's debt troubles. "The combination of ongoing uncertainty over support for the weaker EU members, the U.S. passage of the health care bill and India's surprise interest rate hike have markets taking back some of last week's gains," Scotia Capital said of the currency market.

Recovery looks more robust

Canada's economic prospects are brightening faster than many observers had projected, based on recent indicators.

Coming off a strong showing at the end of last year, BMO Nesbitt Burns deputy chief economist Douglas Porter notes that "the trend really gathered momentum since dawn broke in March." Auto sales have surged, housing starts hit a February level of almost 200,000 annualized, Canada's trade surplus reached its best level in a year, some 60,000 full-time jobs were created last month, and manufacturing, home and retail sales have all jumped.

"While some of these high-side surprises came fully equipped with a 'yes, but' caveat ... there is simply no mistaking that growth and inflation have more underlying power than even the most strident optimist would have believed just a few short months ago," Mr. Porter said in a research note, and BMO now projects the economy will expand by 4.7 per cent in the first quarter.

"The conventional wisdom has relentlessly been that this will be a sub-par recovery, and the only debate has been whether we are headed for a U- or W-shaped rebound," Mr. Porter added, referring to a slower recovery denoted by a U, or the dreaded W, as its shape suggests.

"It looks more and more V-shaped by the day, and policy makers still have their foot firmly planted on the gas pedal," he said.

Mr. Porter is not alone. In a note titled "Eh Canada!," Scotiabank's Aron Gampel noted that "virtually everything Canadian is shining in the post-Olympic 'golden aura,' with investors buying stocks, bonds, real estate, companies, and the currency."

But recent indicators are just that. They can turn from month to month, and economists still expect bumps on the path to recovery. Mr. Gampel noted several factors that indicate "a more gradual appreciation in Canadian prospects." The Canadian economy remains closely tied to the United States, and Canada faces a long run of competitive pressures, he said, citing the impact of a stronger dollar on exporters. As well, he said, trade hurdles grow "more frequent and larger during times of international stress."

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  • Updated July 21 12:40 PM EDT. Delayed by at least 15 minutes.

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