STOCK MARKETS — TSE recovers after possible `correction’

After starting the week with what was thought to be an ominous “correction,” many investors timidly re-entered the market and nudged the index back on an upward trend. Despite the weak gains, the TSE 300 composite closed at 4,619.3 points, down 48.19 for the 5-day report week ended July 25.

A rise in borrowing costs in the U.S., combined with upbeat news about the U.S. and Canadian economies, helped push the Bank of Canada rate higher. The trend-setting rate rose by nine basis points to 6.87%.

The Canadian dollar, supported by the positive economic news and a small increase in the Bank rate, managed to post a gain of US0.39 cents. The dollar closed at US73.77 cents.

Both the metals-and-minerals and the gold-and-precious-metals sub-indexes mimicked the broader composite index, posting modest losses.

The metals-and-minerals sub-index dropped 3.2% and closed at 4,956.88 points, while its precious metals counterpart fell by more than 3.7% from the previous week’s close, ending at 10,707.26 points.

Precious metals prices followed the sub-index, with the London morning gold fix for July 26 set at US$385.80 per oz., down US$3.45. The fix for platinum also closed lower, dropping US$9.75 per oz. to end at US$430.50, while the silver fix closed at US$5.15 per oz., down US19 cents.

Senior gold-mining companies followed the drop in price, with Barrick Gold shedding $2 to close at $34.63. Also losing ground were Placer Dome, which dropped $2.25 to finish at $36.25, and Echo Bay Mines, which lost 13 cents to close at $13. Second-quarter results from Hemlo Gold Mines had a negative effect on the share price; the issue closed at $14.25, down 87 cents.

Bucking the downward trend in the gold sector were royalty companies Franco-Nevada Mining and Euro-Nevada Mining. Both companies are involved in a drilling program on the 22,000-acre Midas gold property on Nevada’s Carlin trend. Although no assays were available from the first 32 holes, the companies reported intersecting substantial widths of high-grade gold and silver mineralization. Shares of Franco-Nevada jumped $4.50 and closed at $83.50, while Euro-Nevada hit a new 52-week high of $54.50 before rolling back to $50, up $2.50.

Increasing copper inventories drove prices lower over the week. Other base metals prices also fell, partly in response to weakening prices for the red metal, but also because slower growth is forecast for the U.S. and Canadian economies. As a result, most senior base metals producers ended the week lower.

Despite posting strong second-quarter results with earnings of 47 cents a share, nickel producer Inco closed lower. The issue lost $1.63 to close at $45.83.

The other senior nickel producer, Falconbridge, posted second-quarter results that indicated stronger earnings. Falco enjoyed net earnings of $72.3 million in the second quarter, compared with $2 million in the same period last year. In addition, Swedish-based Trelleborg intends to sell its 28% interest in Falconbridge. The interest, to be sold publicly in Canada, represents 50 million Falco shares. The issue closed unchanged at $28.75.

Shares of Noranda also ended the week lower, having fallen 63 cents to $29. The senior intends to spend $225 million to buy the 37% of the shares of Brunswick Mining & Smelting that it does not own. Shares of Brunswick jumped $4.13 and hit a new 52-week high of $15 before easing back to $14.83.

Meanwhile, Latin American gold producer Greenstone Resources announced its intention to increase its ownership in the San Andres gold project in Honduras to 92% from 81.75%. More than 3.5 million shares changed hands as Greenstone shares added 10 cents to close at $3.40.

Montreal-listed GeoNova Exporations has been granted an exploration permit to search the Titao concession in western Burkina Faso. The company will spend $300,000 and complete geochemical and regional surveys. GeoNova shares lost 1 cents to close at 23 cents.