STOCK MARKETS — Rising U.S. interest rates hinder TSE

Two factors helped drag the Toronto Stock Exchange lower over the 5-day report period ended Nov. 15: a falling Canadian dollar and rising Canadian interest rates in the wake of a recent decision by the U.S. Federal Reserve Board to boost short-term U.S. interest rates. The composite 300 index dropped 40.17 points to end the week at 4,168.92.

Market analysts are worried that the increased cost of credit may force both consumers and corporations to pull back on their borrowing, resulting in a slowdown in economic growth. Moreover, interest rate increases may lead to reduced corporate profits, which could be bad news for investors. Following the U.S. Federal Reserve Board hike in interest rates, the Canadian dollar slumped to US$73.32, down US0.41 cents from a week ago. The Bank of Canada rate rose to a 2.5-month high of 5.9% at its weekly setting, from 5.81%.

Gold bullion prices moved higher on the week, with the London afternoon fix on Nov. 16 set at US$386.25 per oz., up US$2.65 from a week ago. Senior gold producers were mixed on the week, with Echo Bay Mines off 38 cents to $15.63, Hemlo Gold Mines up 25 cents to $14.13, and American Barrick Resources, the big loser, tumbling $1.25 to $31.50 on a volume of more than 2.8 million shares.

Senior gold producer Placer Dome has bought a stake in a Nova Scotian property and intends to expand operations at one of its producing gold mines. Placer bought a 65% interest in the Goldsboro property from Orex Exploration for expenditure and option payments totaling $30 million. The property hosts a geological resource of 20 million tonnes averaging 3.33 grams gold per tonne. Orex shares gained 2 cents to finish at 28 cents.

Placer also announced that the Porgera gold mine joint venture in Papua New Guinea, in which it holds an 18.9% interest, will undergo a $77-million expansion. The expansion is designed to increase production, lower costs and increase the exploration potential at the mine. Placer shares closed at $24.63, down 13 cents.

For shareholders of Metall Mining, rising operating costs appear to be more significant than improved earnings. Since posting third-quarter results last week, the copper producer has seen its shares drop $1.13. It closed at $11.63. Junior gold explorer Greater Lenora Resources continues to receive encouraging assay results from the Goldfields project in northern Saskatchewan. The company reported new results from eight infill drill holes and three exploration holes drilled below the lower workings of the Box Pit area. Shares of Greater Lenora were up 50 cents during the week, before losing ground to end at $2.35, up 35 cents on the week.

Delays in preparation of the first draft of the environmental assessment statement for the New World gold project in Montana had a negative effect on shares of Crown Butte Resources. The stock lost 55 cents a share to end at $4. A planned amalgamation between William Resources, Orco Resources and Denyvan Resources failed to inspire investors, even though the new company will hold gold projects in Mexico and Quebec, oil and gas assets in Saskatchewan and liquid assets of $4 million. Shares of William lost 12 cents to close at $1.10, Orco shares shed 2 cents to finish at 40 cents while Denyvan shares remained unchanged at 93 cents.

After a long hiatus, shares of International Platinum have hit the market again (now trading on the Canadian Dealing Network). In three days of trading, 91,500 shares exchanged hands, with the issue closing at 23 cents. Citing good potential for corporate growth, Teck announced that it was buying 1 million shares of Montana sapphire producer American Gem at $5 per share. In addition, Teck has signed an agreement giving it the right to participate in future joint ventures with American Gem. Teck B shares lost 88 cents to close at $24, while American Gem was off a nickel at $4.70.