STOCK MARKETS — TSE edges up as interest rate cuts are awaited

Weaker economic signals and the possibility of further interest rate cuts left most investors wondering which way the economy is heading. This dilemma, combined with the long holiday weekend, left many market-watchers biting their nails on the sidelines. Over the 4-day report period ended July 3, the composite index managed an uninspired gain of 17.34 points to close at 4,538.26.

Reports out of Washington and Ottawa indicate that while North American economies are growing, the rate of growth is much slower than was anticipated. During the first quarter, the U.S. gross domestic product posted its lowest quarterly increase in 18 months; while in Canada, the gross domestic product for April inched up by a mere 0.1%. The good news for miners is that the increase is largely attributable to a strong performance in the mining sector.

Weaker economic signals in the U.S. have led to speculation that the federal reserve board may indeed cut interest rates in order to revive the listless economy. A decision by the board is expected shortly. While pundits are unsure whether U.S. interest rate cuts are imminent, most agree that rates in Canada will continue to fall during the summer months.

Both the trend-setting Bank of Canada rate and the Canadian dollar ended the week on a strong footing. The Bank set its key rate at 7.05%, up eight basis points, while the dollar managed to post a gain of US0.13 cents to end at US72.9 cents.

Precious metals appeared to lose some of their lustre as prices for gold, silver and platinum fell rather sharply. The London morning gold fix on July 5 was US$384.60 per oz., off US$4.70; the fix for platinum was US$434 per oz., down US$8; and silver was pegged at US$5.07 per oz., off US26 cents.

The fall in the gold price dragged the gold and precious metals subgroup lower for the second consecutive week. The subgroup ended at 10,555.50, down 1.7% from the previous week’s close.

Senior gold issues also fell, with Placer Dome leading the decline, shedding $1 to end at $35.88; Barrick Gold dropping 50 cents to $35; Echo Bay Mines falling 50 cents to $12.75; and Hemlo Gold Mines slipping 13 cents to close at $14.88.

Base metal prices were either neutral or moderately stronger, compared with the previous week. For the second week in a row, nickel posted the strongest gain, with the London settlement price on July 5 being US$3.91 per lb., up US20 cents.

Following the announcement that Inco and Diamond Fields Resources closed their deal, giving Inco an interest in the Voisey Bay nickel-copper discovery, Teck, which has a 10.4% interest in Diamond Fields, announced a preliminary minable reserve figure for the deposit. The deposit contains reserves totalling 31.7 million tonnes averaging 2.83% nickel, 1.68% copper and 0.12% cobalt. Inco shares gained $1.13 to $39.38, Diamond Fields added 38 cents to $66.50, while Teck class B shares lost 38 cents to close at $27.

News of an upcoming exploration program on concessions in Greenland held by Platinova A/S helped the stock gain ground. The company and its partner will complete geophysical and geological surveys on three concessions in search of Voisey Bay-type mineralization. Platinova shares gained 50 cents to close at $3.20.

Diamond explorer Aber Resources announced results from its latest drilling program on the A-154 kimberlite. A total of 255.6 carats were recovered from a 56.5-kg sample. As a result, Aber and partner Kennecott Canada intend to complete a $23.5-million program consisting of deep drilling and bulk sampling. Aber shares added $1.63 to close at $10.50.

Shares of Montreal-listed Exploration Brex almost doubled last week, rising 41 cents to close at 93 cents. The company has signed an agreement to acquire a 50% interest in a land package on the Carlin trend in Nevada. The property is close to producing mines and features significant gold geochemical anomalies.

Australian-oriented Tri Origin Exploration has drilled a new massive sulphide lens on the company’s Lewis Ponds project. The intersection averaged 2.53 grams gold and 127 grams silver per tonne and 15% combined copper-lead-zinc. Tri Origin shares jumped 60 cents to close at $1.70.