TSX heads for slightly higher open amid eurozone nervousness, mixed commodities

TORONTO – The Toronto stock market looked set to open little changed Monday amid a dearth of market moving news, low late-summer volumes and another round of nervousness about Europe’s debt crisis.

The commodity-sensitive Canadian dollar was up 0.03 of a cent to 101.13 cents US while oil prices moved slightly higher and prices for gold and copper declined.

U.S. futures were in the red with the Dow Jones industrial futures down 18 points to 13,229, the Nasdaq futures were off 0.8 of a point at 2,775.2 and the S&P 500 futures dipped 1.4 points to 1,413.8.

Rising consumer confidence data from Friday helped send oil prices up for a fifth straight day with the September contract on the New York Mercantile Exchange up 13 cents to US$96.14 a barrel.

Copper prices gave back last week’s three-cent gain, with the September contract in New York off four cents to US$3.38 a pound.

December bullion eased $2.40 to US$1,617 an ounce.

The Toronto stock market finished last week with a respectable 1.67 per cent gain that left the TSX at its highest level since early May, when the European debt crisis took a turn for the worse as markets focused on high debt levels in Spain.

It also left the TSX ahead of where it started 2012 trading.

Traders have been encouraged by a string of positive economic data, including better than expected readings on U.S. job creation, retail sales, industrial production and building permits. There has also been growing confidence that central banks will do whatever is necessary to keep a fragile recovery going.

Markets have also reacted positively to a commitment by European Central Bank president Mario Draghi on Aug. 2 that the ECB would do whatever it takes to keep the eurozone monetary union intact.

That has been taken to mean that the ECB could ramp up its purchases of government bonds to lower the high interest yields faced by some governments, if those countries first applied for help from the eurozone’s bailout fun.

However, Germany’s central bank, the Bundesbank, has again stressed its skepticism toward those proposed purchases, despite signs Chancellor Angela Merkel is open to the ECB’s plans. The German national central bank said in its monthly report Monday that such purchases would carry “substantial risks.”

Spain’s economy minister, Luis de Guindos, said over the weekend that the ECB should make purchases without setting any limit.

High borrowing costs on government bonds are threatening to ruin the finances of Spain and Italy. Bond purchases could drive down those costs, though an earlier, limited ECB bond purchase program failed to decisively lower them.

Investors this week are also watching Greek Prime Minister Antonis Samaras’ visit to Germany and France, where he is expected to ask for an extension on Greece’s deadline to meet fiscal targets as it carries out painful reforms.

A senior German politician said over the weekend that Greece doesn’t have any wiggle room, darkening investors’ mood over Europe’s simmering debt crisis.

European bourses were mixed with London’s FTSE 100 index down 0.36 per cent, Frankfurt’s DAX rose 0.2 per cent while the Paris CAC 40 slipped 0.11 per cent.

Earlier in Asia, the Shanghai Composite Index dropped 0.4 per cent to the lowest level since early 2009 as investors continue to be cautious about the world’s second largest economy amid mounting signs of a slowdown. The smaller Shenzhen Composite Index gained 0.3 per cent.

Japan’s Nikkei 225 index rose 0.1 per cent, South Korea’s Kospi was practically unchanged while Hong Kong’s Hang Seng shed 0.1 per cent.

In corporate news, Franco-Nevada Corp. (TSX:FNV) has agreed to commit $1 billion toward paying for the cost of a major copper mining project being led by Inmet Mining Corp. (TSX:IMN). Inmet owns 80 per cent of the Cobre Panama project and the remainder is owned by Korea Panama Mining Corp.

Shares in U.S. home improvement chain Lowe’s fell 6.3 per cent in pre-open trading as it said its fiscal second-quarter net income dropped 10 per cent to US$747 million or 64 cents a share. Lowe’s also lowered its fiscal 2012 earnings and revenue outlooks on Monday.

Lowe’s has said it would like to acquire Rona Inc. (TSX:RON), Canada’s largest home-improvement retail chain, but it has been rejected by the company and faces opposition from the province of Quebec.

Electronics chain Best Buy Co. has named Hubert Joly, the former CEO of global hospitality company Carlson and turnaround expert, as its new CEO and president. The announcement comes after the company announced Sunday that its offer to advance talks with company co-founder Richard Schulze on his takeover bid was rejected. Best Buy stock fell 4.3 per cent in pre-open trading in New York.