TSX heads for lower open as eurozone recession deepens, Barrick posts big loss

TORONTO – The Toronto stock market headed for a sharply lower open as data showed worsening economic conditions in Europe and big losses and writedowns in the Canadian gold sector.

The Canadian dollar rose 0.04 of a cent to 99.86 cents US.

Barrick Gold Corp. (TSX:ABX) is cutting or delaying US$4 billion in previously budgeted capital spending and writing down the value of its copper business unit by US$4.2 billion after taxes.

It’s also looking to reduce overhead costs by more than $100 million this year, although it didn’t provide details on how it will make those cuts.

Toronto-based Barrick made the announcement as it posted a $3.06-billion net loss in the fourth quarter. Its shares were up 0.82 per cent in pre-market trading in New York.

Elsewhere in the precious metals sector, Kinross Gold Corp. (TSX:K) reported a a quarterly net loss of $2.99 billion, or $2.62 per share, compared to a net loss of $2.79 billion, or $2.45 per share in the year earlier period. On an adjusted basis, Kinross reported net earnings of $276.5 million, or 24 cents per share, which beat analyst estimates by a penny.<

Revenue for the quarter came in at $1.186 billion, less than the $1.23 billion that analysts had expected. The miner also cut its capital expenditures for 2013 compared to 2012. It forecast total capital expenditures of approximately $1.6 billion for the year, down $325 million last year.

U.S. futures were also deep in the red after Eurostat, the EU’s statistics office, said Thursday the eurozone economy shrank by 0.6 per cent in the final quarter of 2012 from the previous three-month period. The decline was bigger than the 0.4 per cent drop expected in markets and represented the biggest fall since the first quarter of 2009 when the global economy was in its deepest recession since the Second World War.

The eurozone has now contracted for three straight quarters, weighed down by weak, debt-laden countries such as Greece and Spain, where governments have been aggressively increasing taxes and cutting spending.

Equally worrisome was worsening conditions in Europe’s biggest economy. The German economy shrank by a quarterly rate of 0.6 per cent in the fourth quarter as demand for its exports fell.

The Dow Jones industrial futures fell 54 points to 13,904, the Nasdaq futures were down 11 points to 2,759.2 while the S&P 500 futures lost five points to 1,512.25.

There was also major acquisition activity in the U.S. Warren Buffet’s Berkshire Hathaway and Brazilian investment company 3G are buying food giant Heinz for US$28 billion or $72.50 a share. Heinz shares surged 20.6 per cent to $72.94 in pre-market trading in New York.

It is a very heavy earnings week in Canada.

On Wednesday after the markets closed, Sun Life Financial (TSX:SLF) said that it earned $395 million, or 65 cents per share, in the three months ended Dec. 31, 2012, compared to a loss of $525 million, or 90 cents per share, a year ago when it booked some major charges. Operating earnings, which excludes items that the company believes are not ongoing, came in at 76 cents per share, outdoing analyst expectations of 63 cents per share, according to a poll by Thomson Reuters.

Other Canadian companies posting results Thursday included Cenovus Energy (TSX:CVE) and gas giant EnCana Corp. (TSX:ECA).

In the U.S., General Motors said it made $898 million or 54 cents a share in the latest quarter, up from $468 million in 2011. Revenue grew three per cent to $39.3 billion.

The fourth-quarter profit included billions in one-time accounting gains and losses that ended up being a $100 million increase. Without it the company earned 48 cents per share. That was short of analyst estimates. They predicted 51 cents.

Revenues were $4.25 billion, which came in short of analyst predictions of $5.95 billion, and were lower than the $5.37 billion reported a year earlier. GM stock fell 0.9 per cent in pre-market trading.

On the commodity markets, the March crude contract on the New York Mercantile Exchange gained 11 cents to US$97.12 a barrel.

April bullion gained $3.90 to US$1,649 an ounce while copper for March was unchanged at US$3.74 a pound.

Economic data pushed European bourses lower as London’s FTSE 100 index lost 0.62 per cent, the Paris CAC 40 dropped 0.57 per cent while the Frankfurt DAX gave back 0.94 per cent.

But Asian stock markets finished mostly higher, ahead of a meeting this weekend of finance ministers of the Group of 20 major advanced and developing nations in Moscow. Japan’s Nikkei 225 index rose 0.5 per cent, brushing aside data showing the Japanese economy shrank for a third straight quarter in the last three months of 2012.

Investors believe the yen’s recent weakness will boost company earnings.

South Korea’s Kospi rose 0.2 per cent, Australia’s S&P/ASX 300 advanced 0.7 per cent and Hong Kong’s Hang Seng added 0.9 per cent. Markets in Singapore and the Philippines fell while mainland China and Taiwan remained closed for Lunar New Year holidays.