news Stocks rise on G20 summit expectations, changes in mark to market rules

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Stocks rise on G20 summit expectations, changes in mark to market rules



1 hour, 2 minutes ago




By Malcolm Morrison, The Canadian Press


TORONTO - Stock markets continued to rally Thursday morning amid positive news from the G20 conference in London and a change to U.S. accounting rules that could boost damaged banks' balance sheets.

Toronto's S&P/TSX composite index rose 122.5 points to 9,064.3 after better-than-expected U.S. economic data helped send the main index 221 points higher Wednesday.

Shares in transportation giant Bombardier Inc. (TSX:BBD.B) rose 31 cents to $3.35 after the Montreal-based company said it is cutting 10 per cent, or 3,000 of its aerospace division workers. Declining aircraft sales have prompted Bombardier to reduce its business and regional jet production outlook for the coming year.

The announcement also came as the Montreal-based company reported financial results that show an increase in both profits and revenues for Bombardier's fourth quarter and full business year.

The TSX Venture Exchange slipped 2.48 points to 967.61 while the Canadian dollar rose 0.99 cent to 80.29 cents US.

The Dow Jones industrial average moved ahead 194.7 points to 7,956.3 on top of a 153-point advance.

The Nasdaq composite index moved up 43.61 points to 1,595.21 and the S&P 500 index points climbed 20.8 points to 831.9 as the independent Financial Accounting Standards Board changed the so-called mark-to-market accounting rules, which require companies to value assets at prices reflecting current market conditions.

The changes will allow the assets to be valued at what they would go for in an "orderly" sale, as opposed to a forced or distressed sale.

The mark-to-market rules have forced banks to take steep writedowns on some assets.

There were signs of agreements at the G20 conference to give more money to the International Monetary Fund, clamp down on tax havens and tighten regulation over freewheeling hedge funds.

Canadian sources told The Canadian Press the group will likely approve giving more than US$500 billion in total to the International Monetary Fund so it can increase loans to struggling governments.

Other sources close to the negotiations said France and Germany had persuaded leaders to back tougher language in the final statement on stronger financial regulations to avoid a repeat of the current crisis.

There was more disquieting news on the employment front a day before the U.S. government releases its March non-farms payroll report.

The U.S. Labour Department said new jobless claims rose to 669,000 last week from the previous week's revised figure of 657,000.

That total was above analysts' expectations and the highest in more than 26 years, though the work force has grown by about half since then.

Economists forecast that tomorrow's report will show employers cut 654,000 jobs in March, while the unemployment rate increased to 8.5 per cent from 8.1 per cent.

The strong showing extended a rally that started March 10 and as of Wednesday's close had lifted the TSX and the Dow industrials about 18 per cent after the indexes had plunged to multi-year lows.

The Toronto market got added lift from rising crude prices. The energy sector climbed 4.25 per cent as the May crude contract on the New York Mercantile Exchange rose $3.60 to US$44.79 a barrel. EnCana Corp. (TSX:ECA) gained $1.48 cents to $55.03 and Suncor Inc. (TSX:SU) ran ahead $1.41 to $29.96.

The financial sector gained three per cent as TD Bank (TSX:TD) advanced $1.10 to $45.65 and Scotiabank (TSX:BNS) rose 56 cents to $32.69.

The gold sector was the biggest TSX drag, down almost eight per cent as the June bullion contract on the Nymex moved down $27.40 to US$900.30 an ounce. Barrick Gold Corp. (TSX:ABX) faded $2.62 to $40.18 while Goldcorp Inc. (TSX:G) was down $3.42 to $40.58.

H&R Real Estate Investment Trust (TSX:HR.UN) says it has obtained $425 million worth of financing for its Bow tower, a massive skyscraper project that is to serve as headquarters for energy giant EnCana Corp. (TSX:ECA). Its units gained 37 cents to $7.97.

Asian stock markets soared as stronger-than-expected U.S. data on manufacturing and construction boosted confidence the world's largest economy is on the mend.

Japan's Nikkei 225 stock average jumped 4.4 per cent, while Hong Kong's Hang Seng led Asia's gains, 5.2 per cent.

Britain's FTSE 100 rose 3.35 per cent, Germany's DAX index jumped 4.8 per cent, and France's CAC-40 rose 4.35 per cent as the European Central Bank lowered its benchmark interest rate to a record low of 1.25 per cent.