Toronto market closes lower as hopes fade for pre-Christmas fiscal cliff deal

TORONTO – The Toronto stock market closed in the red Thursday but pared earlier losses as oil prices turned positive even as hopes faded for a pre-Christmas deal to avert the U.S. “fiscal cliff.”

The S&P/TSX composite index was down 14.92 points at 12,388.71 after earlier dropping as much as 70 points despite some positive domestic economic data. The TSX Venture Exchange was up 3.98 points at 1,180.5.

Research In Motion (TSX:RIM) reported after markets closed that it had an adjusted loss of $114 million or 22 cents per share in the third quarter, better than the loss of 32 cents per share that analysts had been expecting.

Revenue totalled $2.73 billion, down from $5.17 billion, but also better than the $2.6 billion analysts had been expecting.

The company shipped 6.9 million BlackBerry smartphones and 255,000 BlackBerry PlayBook tablets in the quarter, while the subscriber base slipped to 79 million from 80 million in the second quarter.

RIM shares had closed up 3.4 per cent or 46 cents at $13.95 before the earnings news. In after-hours trading in New York, RIM shares (Nasdaq:RIMM) moved up $1.10, or 7.79 per cent, to $15.22.

Strong economic data from both sides of the border was overshadowed on the TSX by doubts about a pre-Christmas deal to avert the so-called “fiscal cliff” as budget talks in Washington reached a partisan standoff. Without a deal, massive spending cuts and tax hikes will automatically go into effect, something economists believe could throw the U.S. economy back into recession.

Still, Wall Street moved higher amid strong economic data. The Dow Jones average added 59.75 points to 13,311.72, the Nasdaq moved 6.03 points higher to 3,050.39 and the S&P rose 7.88 points to 1,443.69.

“We got the good news on both sides (of the border) … but the big thing is the fiscal cliff worries are overshadowing the positive economic data,” said Jennifer Dowty, portfolio manager for Manulife Asset Management.

“It appears like we’re going to go down to the wire on this one.”

Investors remain focused on budget talks in Washington.

The Republican-controlled House pushed ahead Thursday with a bill that would raise taxes on people earning over $1 million a year as hopes faded for a pre-Christmas deal between President Barack Obama and Speaker John Boehner to avert the so-called “fiscal cliff.”

Democratic leaders vowed to let the House measure die in the Senate without a vote and urged Boehner to return to the negotiating table.

“If you get any sort of indication that perhaps negotiations are advancing and we get to any sort of agreement then the market will rally on that,” Dowty said.

“It’s very predicated on any news and that’s why you’re seeing heightened interday volatility as well.”

The Canadian dollar turned around earlier losses to add 0.09 of a cent at 101.29 cents US as commodities prices were mixed but Statistics Canada released some positive data on retail sales and payrolls.

The February oil contract added 15 cents to US$90.13 a barrel and February gold futures were down $21.80 to US$1,645.90 an ounce. Copper prices shed seven cents to US$3.54 a pound.

Statistics Canada said average weekly earnings of non-farm payroll employees rose to $909 in October, up 0.9 per cent from September.

On a year-over-year basis, earnings were up 2.8 per cent. That reflected a number of factors, including wage growth and changes in the composition of employment by industry as well as the average number of hours worked.

Statistics Canada also reported retail sales edged up 0.7 per cent to $39.4 billion in October, the fourth straight monthly increase. In volume terms, retail sales increased 0.3 per cent, with eight of 11 subsectors reporting gains.

The U.S. economy grew at an annual rate of 3.1 per cent over the July-September quarter as consumers spent more and state and local governments added to growth for the first time in nearly three years. But the economy is likely slowing in the current quarter.

The U.S. Commerce Department’s third and final estimate Thursday of growth for the July-September quarter was revised up from its previous estimate of a 2.7 per cent annual growth rate.

However, the number of Americans applying for unemployment benefits rose last week by 17,000, reversing four weeks of declines. The Labour Department reports that a seasonally adjusted 361,000 people sought unemployment aid the week ended Dec. 15, up from a revised 344,000 the week before.

Meanwhile, sales of previously occupied homes in the United States jumped to their highest level in three years last month, bolstered by steady job gains and record-low mortgage rates.

The National Association of Realtors said Thursday that sales rose 5.9 per cent to a seasonally adjusted annual rate of 5.04 million in November. That’s up from 4.76 million in October.

Traders also took in news that IntercontinentalExchange Inc. has signed a friendly agreement to buy NYSE Euronext for about $8.2 billion in cash and stock, a deal that would create an industry giant that includes the New York Stock Exchange and other securities markets.

In Canadian corporate news, Bombardier Inc. (TSX:BBD.B) has a firm deal to sell at least 10 of its new CSeries passenger jets to AirBaltic, which has an option to buy an additional 10 planes. The Latvian airline’s firm order has a list value of US$764 million. The deal could be worth up to US$1.57 billion if AirBaltic fully exercises options to buy an additional 10 Bombardier CS300s.

It’s the second major announcement regarding the new-generation CSeries planes by the Montreal-based aerospace company this week. Bombardier said Thursday that an unidentified airline based in the Americas had signed a letter of intent to buy 12 to 30 CSeries planes, worth up to US$2.08 billion. Shares added 11 cents to $3.68.