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These are stories Report on Business is following Wednesday, Jan. 23, 2013.

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House prices slip
House prices in Canada slipped 0.4 per cent in December from a month earlier, according to a fresh reading today, marking the fourth decline in a row. But values remain "stretched" in some parts of the market, according to the Bank of Canada.

That four-month slide is the first since the recession, according to the Teranet-National Bank home price index.

Year over year, however, prices are up by 3.1 per cent in 11 centres monitored, though that's the slowest pace in three years and marks more than a year of slower growth.

"The differential between Canadian and U.S. annual home price inflation continues to narrow with the U.S. now outperforming Canada for the first time in six and a half years," said senior economist Marc Pinsonneault of National Bank of Canada.

"The price decline in Canada in December was the fourth in a row, a first outside recession since the inception of the composite index ... At the national level, home sales in Canada have started to decrease last May. The cumulative decline up to December is 12.5 per cent."

The monthly decline was steepest in Vancouver, where prices fell by 1 per cent. Vancouver also stands alone as the only city with an annual decline, of 2 per cent.

Prices slipped 0.9 per cent on the month in Calgary, but were up 4.1 per cent on the year. In Toronto, prices slipped 0.3 per cent from November, but were up by a strong 6.3 per cent on the year.

Other centres: Edmonton, down 0.1 per cent and up 1.5 per cent; Halifax, down 0.7 per cent and up 5.6 per cent; Hamilton, up 0.9 per cent and 7.4 per cent; Montreal, down 0.3 per cent and up 3 per cent; Ottawa, down 0.1 per cent and up 2.6 per cent; Quebec City, up 1.7 per cent and 4.2 per cent; Victoria, up 0.9 per cent and flat; Winnipeg, down 0.7 per cent and up 3.9 per cent.

"Within the Canada-wide trend there is considerable variation among the 11 metropolitan markets surveyed," said Mr. Pinsonneault.

"Up through September, the cross-country trend was replicated in the Vancouver market, but in December there were only two markets with continuous runs of deceleration: Toronto (eight months) and Winnipeg (six months)."

The index differs from prices reported monthly by the Canadian Real Estate Association.

Canada's housing market has been cooling rapidly since Finance Minister Jim Flaherty brought in his fourth round of changes to mortgage rules in an attempt to tame the market amid record consumer debt burdens, though the central bank said today it's seeing signs that Canadians are heeding the warnings.

"Sales of existing homes have fallen, partly because of measures taken by federal authorities," the Bank of Canada said today.

"Housing starts have also declined from very high levels, decreasing from roughly 225,000 units [at an annual rate] through much of 2012 to about 200,000 units in November and December," it said in its monetary policy report.

"However, home building still remains above demographic demand, which is estimated at around 185,000. Ongoing strong rates of construction, particularly of multiple-unit dwellings in some regions, continue to point to overbuilding ... Despite some softening in house prices, valuations in some segments of the housing market remain stretched."

Bank of Canada cuts outlook
The Bank of Canada says the next move in interest rates will still be up. But given a weaker outlook and eased concerns over consumer debt, such a hike is "less imminent" than it had expected earlier.

The central bank held its benchmark overnight rate steady at 1 per cent as it forecast that Canada's economy would expand by 2 per cent this year, below the original 2.3 per cent originally projected, The Globe and Mail's Kevin Carmichael reports.

It sees gross domestic product growing 2.7 per cent next year, and the economy reaching its full capacity later than expected, in the second half of 2014.

"The slowdown in the second half of 2012 was more pronounced than the bank had anticipated, owing to weaker business investment and exports," the central bank said, now pegging last year's growth at 1.9 per cent.

"Caution about high debt levels has begun to restrain household spending. The bank expects economic growth to pick up through 2013. Business investment and exports are projected to rebound as foreign demand strengthens, uncertainty diminishes and the temporary factors that have weighed on resource sector activity are unwound."

Here's the key line, which signals that the central bank is less concerned over high household debt levels: "While some modest withdrawal of monetary policy stimulus will likely be required over time, consistent with achieving the 2-per-cent inflation target, the more muted inflation outlook and the beginnings of a more constructive evolution of imbalances in the household sector suggest that the timing of any such withdrawal is less imminent than previously anticipated."

The bank's comments were "more dovish" than analysts had expected, and suggest a long time yet before it hikes rates from their emergency lows.

"Over all a dovish report and statement, which reinforces our view that the bank will remain on the sidelines until early 2014," said economist Peter Buchanan at CIBC World Markets.

Late-breaking earnings
Apple Inc. shares slipped in extended trading after markets closed as the tech giant just missed analysts' expectations on revenue, which nonetheless climbed to $54-billion (U.S.) in its fourth quarter. Apple earned $13.1-billion or $13.81 a share.

Shares of Netflix Inc. surged in after-hours action after it posted a quarterly profit of $8-million, or 13 cents a share, and higher revenue of $945-million, and adding subscribers, having warned earlier of an expected loss.

Cameron pledges referendum
British Prime Minister David Cameron has added more uncertainty to an already fragile Europe, which is reeling from three years of a raging debt crisis.

As our London correspondent Paul Waldie reports, Mr. Cameron today gave his long-awaited speech on the country's future in the European Union, promising to try to amend the terms of its membership and then to put it in the people's hands via a referendum. This would follow the next election.

"Today public disillusionment with the EU is at an all-time high," Mr. Cameron said. "The result is that democratic consent for the EU in Britain is wafer thin."

Europe's politicians have struggled to find a co-ordinated approach to the region's economic woes, notably among the 17 nations that share the euro, but also in the wider 27-member EU. Only in the last few months has some stability emerged since Greece kicked off the crisis.

"It has been suggested that David Cameron's decision to pledge a vote on EU membership could well unsettle markets; however it is becoming abundantly clear that the current status quo is also creating just as much uncertainty," senior analyst Michael Hewson of CMC Markets said before the prime minister's speech.

"Whether this is the right approach only time will tell, but it is sure to attract a firestorm of debate and criticism on both sides of the political divide, in the U.K. as well as Europe."

Through plague and war ... and derivatives
Said to be the world's oldest bank, Italy's Monte dei Paschi di Siena has survived everything from the plague of 1629 to the Appenine earthquakes of 1703.

Indeed, it was formed in 1472, the year of the war between Volterra and Florence that led to the Eucharistic Miracle of Volterra.

The question now is how it deals with the curse of the modern financial era: Derivatives.
After plunging for two days, the bank's shares were suspended from trading in Milan today amid press reports in Italy that suggest a derivatives deal with Nomura Holdings will show a massive hit to the bank's 2012 earnings.

The Italian bank is also seeking some €500-million ($660-million Canadian) in additional government aid.

The bank announced earlier this month that it has launched a "thorough analysis" of "certain structured transactions" in the recent past.

"Having assessed the potential impacts, the board will then be in a position to adopt all necessary measures to ensure a fair accounting representation of the transactions in question, including retrospectively," the bank said yesterday.

"Upon conclusion of the assessment process, the bank shall provide a precise indication of any potential balance sheet and profit and loss impacts resulting from the analysis currently being completed."

Where Nomura is concerned, it added in a separate statement that "it does not turn out that the transaction was submitted to the board of directors of Banca Monte dei Paschi di Siena for approval."

End of lockout boosts business
Hockey's back, and with it fast food and booze.

According to a report released today by Moneris Solutions Corp., a credit and debt card processor, credit card spending at restaurants and bars increased by 9 per cent in a specific six-hour period, starting two hours before the games, in cities where home games were played last weekend as the NHL lockout ended.

That includes fast-food outlets.

Vancouver got the biggest boost, with a gain of more than 19 per cent over the previous weekend, followed by Winnipeg at about 10 per cent, Calgary at 3 per cent and Montreal at 2 per cent.

Bars did exceptionally well, up 34.5 per cent in Winnipeg and 22.6 per cent in Vancouver, followed by Montreal at 15 per cent and Calgary at 14 per cent.

The Toronto Maple Leafs were away, but the city's bars still did better, to the tune of more than 12.5 per cent.

Just sayin'
Jodie Foster, at the Golden Globes:

"But seriously, if you had been a public figure from the time that you were a toddler, if you'd had to fight for a life that felt real and honest and normal against all odds, then maybe you too might value privacy above all else. Privacy."

Mark Carney, at a press conference today:

"I understand a few people had questions about it, but in the end ... what we are talking about is my private life, my private vacation. I don't see that I need to detail my private life and my interaction with my friends."

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