Canadian heavyweights kicked off S&P 500

The July 3-9 report period ended with a surprise bang, when Standard & Poor’s announced that it was removing Alcan, Barrick Gold, Placer Dome and Inco from its S&P 500 index and replacing them with American companies. The expulsion is slated for July 19 and does not effect the Canadians’ listings on the S&P/TSX.

According to the credit-rating agency, the decision enhances the benchmark’s reflection of U.S. equities markets by ensuring that all members are American-based. The expelled, which also include Nortel Networks and two European companies, gained entry before the new selection criteria were emplaced and global indices were established.

Standard & Poor’s notes that historic adjustments typically have little long-term effect on share prices but that short-term fluctuations do occur. That certainly seemed the case north of the border, where Inco fell $2.78 on July 10 as 3.9 million shares changed hands; Alcan, $2.15 as 3.8 million shares moved; Barrick, 35 as 5.7 million shares were traded; and Placer, 16 to $17.08 as 6.3 million shares crossed the floor. Losses were more severe during the morning session.

In London, gold was fixed at US$313.80 per oz. on the morning of July 10 for a loss of 65 over the report period. Silver, on the other hand, rose 12 to US$5.04 per oz.

Among the white metal crowd, Corner Bay Silver climbed 25 to $5.40 on the company’s completion of a positive feasibility study for the Alamo Dorado project in Sonora state, Mexico. Although certain permits and financing must be obtained, Corner Bay expects construction to begin early next year.

Meanwhile, directors of Corner Bay and Pan American Silver agreed to a simplified merger formula, leaving the final say to shareholders and regulators. The latter is now offering 0.385 of a treasury share and 0.1925 of a purchase warrant for each Corner Bay share. Pan American rose 75 over the period to finish at $12.90.

London base metals prices were up across the board: nickel climbed 16 to US$3.37 per lb. on the morning of July 10, while lead, copper and zinc marched foward 1 to US21, US75 and US37 per lb., respectively. Nickel’s surge pushed Inco ahead 40 over the period, but the Standard & Poor’s announcement yanked it back.

The remaining majors were a mixed bag: Falconbridge rose 8 to finish the period at $19.63; Cameco slipped 17 to $38.67; Noranda eased ahead 3 to $18.94; and Teck Cominco‘s B-series fell back 22 to $13.43. Noranda intends to close its CCR copper refinery in Montreal for three weeks, starting July 28. Anode supply has been tight ever since employees at the Horne smelter, in the northern part of the province, walked off the job three weeks ago. The smelter also has scheduled a 3-week shutdown, starting July 21.