TSX heads for positive open amid major energy acquisition, mixed earnings

TORONTO – The Toronto stock market looked set for a modest gain at the open Wednesday amid rising oil prices, mixed earnings reports and major acquisition activity in the oilpatch.

Canadian affiliates of U.S. energy giant Exxon Mobil Corp. (NYSE:XOM) have agreed to buy Celtic Exploration Ltd. of Calgary (TSX:CLT) in a transaction valued at $3.1 billion, including assumed debt and spending obligations.

Celtic’s shareholders are being offered $24.50 per share and a half-share of a new company, code-named Spinco, in return for each share. Celtic’s stock closed Tuesday at $18.12 on the Toronto Stock Exchange before the announcement.

Also in Canada’s energy sector, Penn West Petroleum Ltd. (TSX:PWT) has agreed in principle to sell $1.3-billion worth of its non-core properties, representing the equivalent of 12,000 barrels per day of production. Details weren’t disclosed.

The Canadian dollar was up 0.25 or a cent to 101.59 cents US.

The loonie fell 0.7 of a cent Tuesday in the wake of a speech by Bank of Canada governor Mark Carney, which traders interpreted as containing a more dovish tone toward the possibility of hiking rates.

The bank makes its next announcement on interest rates next Tuesday.

U.S. futures were mixed with the Dow Jones industrial futures ahead 10 pointsto 13,463, the Nasdaq futures dipped 1.75 points to 2,763.5 and the S&P 500 futures ran ahead 3.3 points to 1,452.5.

In corporate earnings, PotashCorp (TSX:POT) says its profit this year will fall short of expectations following delays in reaching contracts with fertilizer buyers in China and India. It says that earnings for the full 2012 financial year will fall below even the lowest previous estimate of $2.80 to $3.20 per share.

Bank of America said Wednesday that it narrowly turned a profit of US$340 million in the latest quarter, which works out to a fraction of a penny per share. Financial analysts expected an 11-cent loss.

Intel beat expectations for the third quarter, handing in third-quarter net income of $2.97 billion, or 58 cents per share after the close Tuesday, down from $3.47 billion, or 65 cents per share, a year ago. Excluding one time items, earnings came in at 60 cents, beating estimates of 50 cents.

But it added that the usual bounce in sales due to the holiday season is likely to be cut in half this year as consumers shift from PCs to tablets, which don’t use Intel processors.

IBM says its third-quarter earnings remained unchanged from a year ago despite an unexpected charge and a steeper drop in revenue than analysts anticipated.

IBM Corp. earned $3.8 billion, or $3.33 per share, in the July-September period. The company delivered the same net income a year ago, but its per-share earnings were 14 cents lower last year because the company had more outstanding stock then

There was also growing speculation that Spain will soon ask for help to keep its borrowing costs down after Moody’s rating agency did not cut its credit grade on Spain to junk status, as had been widely feared in recent weeks. Instead, Moody’s said after the European market close on Tuesday that it was keeping its Baa3 rating on Spain, the lowest investment grade.

Investors think it’s only a matter of time before the country will make a request for help to Europe’s bailout fund, a necessary condition for the European Central Bank to start buying its bonds in the markets.

The Spanish government said Wednesday it will decide within the next few weeks whether to ask for outside financial help.

Oil prices ticked higher with the November crude contract on the New York Mercantile Exchange ahead 13 cents to US$92.22 a barrel.

December copper was unchanged at US$3.70 a pound while December gold gained $5 to US$1,751.30 an ounce.

European bourses headed higher with London’s FTSE 100 index up 0.5 per cent, Frankfurt’s DAX gained 0.11 per cent and the Paris CAC 40 advanced 0.14 per cent.

Earlier in Asia, Japan’s Nikkei 225 stock index closed 1.2 per cent higher while Hong Kong’s Hang Seng gained one per . In mainland China, the main index in Shanghai rose 0.3 per cent.