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Investors flee Bear Creek amid Peru mining upheaval Add to ...

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Analysts take dim view of Bear Creek Analysts have started slashing their outlook for shares of Bear Creek Mining Corp. after the company's stock plunged late Friday amid a deadly protest related to a mining project in Peru.

Five demonstrators were killed, and several more injured, in a clash with police last week, prompting Peru's outgoing government to revoke Bear Creek's licence for the project in Puno province, where several thousand largely Aymara Indian demonstrators have called for a halt to all mining because of pollution fears.

The government pulled the licence on the Santa Ana mine, and halted all new concessions in Puno for three years. As Globe and Mail mining reporter Brenda Bouw reports today, Bear Creek is threatening a legal challenge against the move, which threatens other resource companies in Peru, a region strong in minerals and home to the operations of several mining giants.

Raymond James analyst Brad Humphrey slashed his price target on Bear Creek stock to $7.80 from $13.50.

"This is unfortunate news and admittedly not the route we had anticipated the outgoing government would take," Mr. Humphrey said.

"That said, at current valuations we believe that Santa Ana has already been removed ... The stock will likely be weak as we suspect many investors believed, as we did, that after a review period the project would ultimately be given the green light. As a result (and even though we continue to see good longer term value at current levels) we are lowering our rating from outperform to market perform.:

Greece begins debate This is either the beginning of the end for Greece's troubles, or the beginning of the end for Greece. Whatever happens this week, though, the debt crisis in the euro zone is far from over.

Greek politicians are debating a new round of austerity measures tied to the country's bailout, after an agreement on targets between Athens and the threesome of the EU, the European Central Bank and the International Monetary Fund. A vote is expected Wednesday amid widespread protests against plans to further slash the public sector and hike taxes.

There are some signs of movement today. French President Nicolas Sarkozy said banks in his country are prepared to help out by rolling over debt, and, according to reports, German banks are studying a similar proposal.

"Comments by Chinese PM Wen Jiabao at the weekend that China would remain a long-term investor in Europe's sovereign debt market appear to have been shrugged off by investors as realization dawns that Greece is symptomatic of a wider problem in Europe," said CMC Markets analyst Michael Hewson.

"Furthermore it is likely that it will take a few more than token purchases of European bonds to convince market participants, and bond markets in particular that Europe has the means to resolve its problems. While welcome news to peripheral European economies at a key time it is unlikely that this generosity is prompted by anything other than a determination in keeping their biggest export market ticking over, and it is likely that the Chinese will attach as many strings as possible to any help that may be forthcoming."

As for the proposal to roll over maturing Greek government bonds, Mr. Hewson said that "the big unknown remains with respect to how these would be viewed by the ratings agencies and whether they would be classified as a 'credit event' and therefore subject to a ratings downgrade."

What's coming this week Statistics Canada is expected to report this week that Canada's economy suffered a setback in April, kicking off what is generally believed to have been a soft quarter.

Economists expect the agency's report on gross domestic product Thursday morning will show that the economy contracted in April by 0.1 per cent, compared to March, marking the pullback in three months as Canada continues to climb back from the recession.

"A drop in manufacturing activity, partly due to a pullback in auto production in the wake of Japan's disasters, and related softness in wholesale trade and transportation will account for much of the weakness," said Douglas Porter, deputy chief economist at BMO Nesbitt Burns.

"As well, housing starts and home sales softened from the prior month, as a cold, rainy spring may have dampened this sector and other activity. Providing modest offsets, the election campaign was in full swing and there was a small gain in retail sales volumes, while employment notched a hefty rise. Our call would leave GDP up a moderate 2.6 per cent from year-ago levels, about in line with the economy's long-run trend but well down from last summer's peak above a 4-per-cent pace."

Though the economy softened in the current quarter, consumer prices didn't.

Economists expect a separate Statistics Canada report on Wednesday will show that prices climbed 0.3 per cent in May, which would leave the annual inflation rate at about 3.3 per cent for the third month in a row.

"Food prices were likely flat in May, as further price increases in items such as 'meats' were met with unwinding of the 'Mexican Freeze'-induced run-up in veggie prices," said economist Emanuella Enenajor of CIBC World markets.

"Fuel oil and natural gas prices were likely flat, with pump prices also barely budging from the highest level in three years."

Markets mixed Global markets are mixed this morning as fears over Greece and the U.S. economy continue to weigh on the minds of investors.

"As the first half of 2011 draws to a close, this week has all the hallmarks of being a key milestone in the European sovereign debt story," said CMC Markets analyst Michael Hewson.

"Last week's events look set to continue to weigh on sentiment given recent market concerns about Italian banks and their fiscal health after ratings agency Moody's downgrades last week."

Tokyo's benchmark Nikkei slipped 1 per cent, and Hong Kong's Hang Seng 0.6 per cent. In Europe, Germany's DAX slipped marginally, though London's FTSE 100 and the Paris CAC 40 were up by about 1 per cent by about 8:15 ET.

Dow Jones industrial average and S&P 500 futures also rose.

"Greece remains the focal point for markets, with a three-day debate on the austerity measures beginning today," said BMO Nesbitt Burns.

A vote on the measures is expected on Wednesday, and a vote on an enabling law to ensure the package can be quickly implemented is expected Thursday ... U.S. equity futures are up about 0.3 per cent. U.S. Treasuries are weaker, with two-year yields up 2 basis points to 0.35 per cent, while 10-years are up 1 basis point to 2.87 per cent."

In International Business today The number of new medicines launched globally slumped last year, with a particular drop in the proportion coming from large drug makers, Andrew Jack of The Financial Times reports.

Medicine approvals slump to lowest in decade

In Economy Lab today A common feature of many environmental programs is the idea of "green jobs," he employment opportunities generated by a given set of proposals are presented as an additional benefit of the policy agenda. This is also a common mistake, Stephen Gordon writes.

'Green' jobs: Shrewd PR, bad economics

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