Toronto stock market ends higher as oil prices rise to four-week high

TORONTO – The Toronto stock market gained some ground Friday as oil futures rose to the highest level in four weeks, while investors also weighed a mixed bag of earnings and data showing slowing U.S. economic growth.

The S&P/TSX composite index closed the session up 91.90 points at 12,237.75, while the TSX Venture Exchange lifted 19.52 points to 1,412.76.

In commodities, the June crude contract on the New York Mercantile Exchange gained 38 cents to US$104.93 a barrel, hitting its best finish since April 2.

The TSX oil and gas stock index rose 1.09 per cent.

Meanwhile, the Canadian dollar gained 0.31 of a cent to 101.94 cents US.

On Wall Street, the Dow Jones tracked 23.69 points higher to 13,228.31, the Nasdaq index gained 18.59 points to 3,069.20 and the S&P 500 index was up 3.38 points at 1,403.36.

The U.S. Commerce Department reported that real gross domestic product grew at a 2.2 per cent annualized rate in the first three months of 2012, which is off from a three per cent increase in the fourth quarter of 2011. The data came in below the 2.7 per cent growth rate that economists had predicted.

Investor reaction to the report, as well as concerns about the economic state of Europe, was relatively muted.

“The increase in Q1 GDP was likely, at least in part, the result of a warmer than normal winter, suggesting some downside risk to residential investment in Q2 as this effect will unwind as temperatures return closer to normal in the spring,” said Paul Ferley, assistant chief economist at RBC.

“We expect that underlying improvement in labour markets and signs that, even accounting for favourable weather, housing markets have begun to show modest underlying improvement (that) will remain sufficient to allow further growth in consumer spending.”

May copper lifted 4.5 cents to US$3.825 a pound. Gold bullion prices settled higher with the June contract up $4.30 to US$1,664.80 an ounce.

In Canadian corporate news, Iamgold Corp. (TSX:IMG) reached a friendly $608-million deal to buy Trelawney Mining and Exploration Inc. (TSXV:TRR), a junior company with several gold properties in northern Ontario. Shares of Iamgold fell 16 cents to $12.26, while shares in Trelawney were up 41 per cent or 95 cents to $3.27.

Air Canada’s (TSX:AC.B) shares gained traction after the carrier issued earnings guidance for the coming quarter that exceeded analyst forecasts — saying it expects first-quarter adjusted earnings will range between $170 million and $180 million, well above analyst forecasts that have averaged about $125 million.

The company is also set to resume negotiations with the union that represents its 8,600 mechanics, baggage handlers and cargo agents. Its stock was up 16 per cent, gaining 13 cents at 96 cents.

In other developments, pipeline and utility company TransCanada Corp. (TSX:TRP) cited a mild winter and low natural gas prices among reasons for a decline in first-quarter net earnings that missed analyst expectations. Net income attributable to common shareholders was $352 million or 50 cents per share. Revenue was $1.91 billion, up from $1.86 billion.

TransCanada shares increased six cents to $43.19.

Maple Group Acquisition Corp. concedes that its $3.8-billion takeover deal for TMX Group (TSX:X) is unlikely to receive regulatory approval by the current Monday deadline, but that it intends to extend the bid if it is satisfied with the progress of the regulatory process. TMX shares rose 4.6 per cent, or $1.95, to $44.70.

Steel fabrication company Canam Group (TSX:CAM) exceeded analyst expectations by slashing its first-quarter loss to $1.3 million as revenues grew 38 per cent to $208.3 million. Shares went up two per cent, or 10 cents to $4.65.

Algoma Central Corp. (TSX:ALC) posted a loss of $31.1 million or $8 per share, as it faced costs associated with an acquisition. The results compared with a loss of $17 million or $4.37 per share in the same 2011 period. Revenue rose to $66.1 million from $57.2 million. Its shares were up 15 cents to $119.95.

Stateside, Ford Motor Co. said its net income fell by 45 per cent in the first quarter as European sales plummeted and the company paid higher taxes. Ford posted earnings of $1.4 billion, or 35 cents per share, in the first quarter, down from $2.5 billion, or 61 cents, a year earlier.

Revenue fell two per cent to $32.4 billion.

The automaker’s comments about the European market added to already growing concerns about the state of the eurozone economies.

Coffee company Starbucks also reported a slowdown of sales in Europe.

Spain’s economic problems have become the epicentre of Europe’s debt crisis in recent weeks as investors worry over its ability to push through austerity and reforms at a time of recession and mass unemployment.

On Friday, unemployment numbers showed Spain’s jobless rate jumped to 24.4 per cent in the first quarter, the highest rate in the 17-country eurozone.

The figures came shortly after Standard & Poor’s became the first of the three leading credit rating agencies to strip Spain of an A rating. It cited a worsening budget deficit, worries over the banking system and poor economic prospects for its decision to reduce the rating by two notches from A to BBB+. It warned that a further downgrade was possible as it left its outlook assessment on Spain at “negative.”

Yields on Spanish and Italian government bonds rose, a sign that investors are still uneasy about the ability of those countries to service their debt.