Temex Resources (TME: TSX-V)
0.15 +0.04 (36.36%), Vol. 268,500
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Kinbauri Gold (KNB: TSX-V)
0.44 +0.04 (10.00%), Vol. 31,200
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GOLD

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General Market Commentary

Stocks in both Toronto and New York wallowed in sub-par opening numbers by midday, amid reports interest rates in Canada are sliding again and a warning from the central bank that the economic slump could be deepening.

Banking sector woes helped send New York markets lower with investor attention also focused on the inauguration of Barack Obama as the 44th president of the United States.

At noon EST, the S&P/TSX composite index was down 141.43 points to 8,700.05.

Tuesday, the Bank of Canada has chopped its key interest rate by another half percentage point to its lowest level ever, and warned that the Canadian economy will contract by 1.2% this year.

The central bank's target for the overnight lending rate now stands at 1% – lower than in 1958, when the most-watched policy rate was 1.12%.

However, there was some good news in the statement, as the central bank said that economic growth should rebound, with GDP rising by 3.8% next year.

The Canadian dollar improved following the rate cut announcement, losing 0.004 cent to 79.33 cents after earlier trading around the 79-cent mark.

The loonie has been under intense pressure lately because of the deteriorating economy and a retreat in oil prices.

As if to underscore the central bank's comments on the economy, Statistics Canada announced that manufacturing sales decreased for a fourth consecutive month in November. The agency said that sales fell 6.4% to $48.4 billion, the lowest level since December 2004.

The slide was led by a 20.6% drop among petroleum and coal product manufacturers.

In separate announcements, Toronto-Dominion Bank and Bank of Montreal responded by announcing they have cut their prime lending rates by 50 basis points to 3%. BMO said it is cutting key mortgage rates by 30 to 50 basis points. Canadian Imperial Bank of Commerce and Royal Bank of Canada announced a few minutes later that they, too, have cut their prime rate to 3% from 3.5%.

Online brokerage TD Ameritrade said Tuesday its first-quarter profit dropped 23% and cut its outlook for the year because of America's economic problems. Shares in TD Bank, which has a 40% stake in the company, dipped 22 cents to $42.

The energy sector backed off as oil prices continued to retreat on the continued gloomy outlook for global energy demand and as traders sold the expiring benchmark contract due to a lack of space at a key U.S. storage facility.

Petro-Canada gave back 78 cents to $28.87.

A $215-million quarterly net loss at Suncor Energy Inc. marks the latest low point in the dramatic reversal of fortunes for an industry that just six months ago was struggling to find a home for a tidal wave of cash.

Challenges escalated in the fiscal fourth quarter of 2008 as the precipitous drop in commodity prices dragged Suncor into the red. The company reported a quarterly loss of $215 million or 24 cents a share, reversing year-earlier profits of $1 billion or $1.13 a share. Suncor shares fell 63 cents to $25.63

Shares in Research In Motion were up $1.90 to $65.65 even after Certicom Corp. obtained a court order preventing the maker of the BlackBerry, Curve and Pearl smartphones from pursuing its current hostile bid.

BAYSTREET

Of the 13 TSX sub-groups, 10 were in negative territory, energy tanking the worst, down 3.8%, followed by industrials, down 3.8% and financials 2.9%.

Of the three gainers, gold raced ahead 7.1%, followed by materials, ahead 4.9% and consumer staples, up 0.2%.

The TSX Venture Exchange moved down 4.58 of a point to 868.37, while the NASDAQ Canada put on 4.71 points to 515.98

WALLSTREET

New York's Dow Jones industrial average declined 206.84 points to 8.074.38.

The NASDAQ composite index was off 44.49 points to 1,484.84 while the S&P 500 slipped 20.25 points to 829.87.

Markets are still feeling the aftershocks of yesterday's announcement from the Royal Bank of Scotland that it will likely post a US$41.3-billion loss for 2008 and that the British government will be bailing out banks for the second time in three months.

Investors fear the second government bailout might be a move to fully nationalize some British banks.

Last week, Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. reported dismal fourth-quarter results, and provided a fairly muted outlook for 2009.

Citigroup also said it planned to split its operations in two in an effort to return to profitability.

An analyst at Friedman, Billings, Ramsey & Co. has cut his fourth-quarter estimate and price target for Wells Fargo & Co., citing concerns about rising credit costs.

The Financial Times is reporting that Bank of America will begin cutting as many as 4,000 jobs in its capital markets unit as it consolidates its operations in that division with those of recently acquired Merrill Lynch & Co.

U.S. light crude oil for February delivery rose 30 cents to $36.81 a barrel on the New York Mercantile Exchange.

COMEX gold was at $865.60, up $25.70