TSX to open higher, traders look for oilpatch reaction to new investment rules

TORONTO – The Toronto stock market appeared heading for a slightly higher open Monday as traders waited to see how Friday’s announcement on energy sector takeovers by foreign state-owned energy companies affects companies in the Canadian oilpatch.

The Canadian dollar gained 0.39 of a cent to 101.3 cents US, supported by rising commodity prices in the wake of positive Chinese data.

U.S. futures were lower after Italian Prime Minister Mario Monti’s announced that he intends to resign by the end of the year, saying he found it impossible to lead after former prime minister Silvio Berlusconi’s party, Parliament’s largest, dropped its support.

Monti is widely credited with restoring confidence in Italy amid a debt crisis.

The Dow Jones industrial futures were down 23 points to 13,120, the Nasdaq futures lost six points to 2,630 while the S&P 500 futures slipped 2.8 points to 1,413.

The federal government on Friday approved two high-profile deals. The state-controlled China National Offshore Oil Corp. (CNOOC) got the green light for its $15.1 billion purchase of Nexen Inc. (TSX:NXY). And Malaysian state-controlled energy company Petronas can go ahead with its $6-billion acquisition of Progress Energy Resources Corp. (TSX:PRQ).

However, Prime Minister Stephen Harper made it clear that state-owned energy companies will find it extremely difficult to buy up Canadian oilsands producers in future.

Shares in some of these companies could find themselves the target of sellers at the open since they can no longer realistically hope to be snapped up by foreign state-owned enterprises at fat share price premiums.

BMO Capital Markets analyst Randy Ollenberger identified four such companies that could find themselves under pressure Monday — Athabasca Oil Corp. (TSX:ATH), Meg Energy Corp. (TSX:MEG), Connacher Oil and Gas Ltd. (TSX:CLL) and Southern Pacific Resource Corp. (TSX:STP).

Meanwhile, Italy’s stock market fell sharply and its borrowing costs jumped Monday as investors and European leaders worried over the country’s political and financial future following Monti’s surprise decision to resign. The country’s main stock index, the FTSE MIB, was trading down 3.3 per cent.

At the same time, the interest rate on the Italian government’s 10-year bond, an indicator of how risky investors consider a country’s ability to pay down its debt, rose 0.33 percentage points to 4.8 per cent.

Also adding to investor unease was an announcement from Berlusconi that he was going to run for the premiership.

There was also mixed economic data from China, the world’s second-biggest economy. Export growth plunged to 2.9 per cent compared with a year earlier, while imports were flat, down from October’s 2.4 per cent growth.

The figures were in line with analysts’ warnings that a trade rebound that began in August was unsustainable due to weak global demand amid Europe’s debt problems and a slow U.S. recovery.

At the same time, the Chinese government reported Sunday that factory output increased 10.1 per cent from a year earlier, compared with the previous month’s rise of 9.6 per cent year on year. Retail sales rose 14.9 per cent, up from October’s 14.5 per cent. And electricity consumption rose 7.9 per cent in November from 6.4 per cent in October.

Oil prices advanced amid data showing November crude oil shipments to China, the world’s second-biggest oil importer, were just below their all-time high. China imported an average of approximately 5.69 million barrels per day last month, just below February’s record-high 5.98 million barrels per day.

The January crude contract on the New York Mercantile Exchange gained 72 cents to US$86.65.

Copper prices also advanced sharply with the March contract ahead by five cents to US$3.71 a pound. China is the world’s biggest consumer of the metal, which is viewed as a global economic barometer.

Gold prices also picked up with the February contract up $11 to US$1,716.50 an ounce.

Asian stocks were higher amid hopes that China’s economic slowdown has bottomed out with Japan’s Nikkei 225 index up 0.1 per cent, Hong Kong’s Hang Seng advancing 0.4 per cent and Australia’s S&P/ASX 200 gaining 0.1 per cent.

Among individual stocks, Australia’s Southern Cross Media Group plummeted 5.9 per cent. The group owns the Sydney radio station whose DJs, impersonating the Queen and Prince Charles, called the hospital where the Duchess of Cambridge was being treated for acute morning sickness and obtained confidential information. The nurse who took the call was found dead days later, prompting an investigation.

European bourses were negative with London’s FTSE 100 index down 0.16 per cent, Frankfurt’s DAX up 0.47 per cent and the Paris CAC 40 off 0.24 per cent.

In other corporate news, Enerplus Corp. (TSX:ERF) plans to expand its light oil interests in Montana in a deal valued at US$121 million. Calgary-based Enerplus said Monday that it will acquire an additional 20 per cent working interest in the company’s operated leases in the Sleeping Giant area in the Elm Coulee field.

Spartan Oil Corp. TSX:STO) has received an unsolicited takeover offer. No other details on the offer have been released. Spartan is active the Cardium light oil play in central Alberta and the Bakken light oil resource play in southeast Saskatchewan.