STOCK MARKETS — TSE bounces back after selloff

The Toronto Stock Exchange took a wild ride during the trading period ended Dec. 10, with a steep 2-day slide on Dec. 5 and 6 as stock markets around the world fell in response to speculation that U.S. interest rates were rising.

The TSE 300 composite index fell 100 points in two days, then rebounded on Dec. 9 and 10 to finish the report period at 5,919.86 — 20.87 points lower than in the previous week. Considering the market’s wild swings, daily trading volumes were low, breaking the 100-million mark only twice.

The Canadian dollar fell 54 basis points to US73.42 cents. Trading pressure on the currency started with speculation that U.S. interest rates might rise, but the Bank of Canada allowed the loony to drop against the greenback. Other major foreign currencies rose against both North American dollars.

Gold fell again this week, with the London morning fix at US$369.60 per oz.

on Dec. 11, down 80 cents from a week before. Silver rose 4 cents to finish at US$4.87 and platinum was $3.25 lower at US$369.25 per oz.

The TSE gold and precious minerals sub-index was 731.93 points higher, closing at 11,573.68 points on Dec. 10 for a gain of 6.8% on the week.

Virtually all the gold issues were higher.

Bre-X Minerals was the most active issue over our report period, up $1.25 at $20.65. The company was recently forced by the Indonesian government to negotiate a deal whereby Barrick Gold would end up with a 75% interest in its huge Busang gold deposit in Indonesia. The Dec. 4 deadline came and went and, at presstime, no deal had been made. The stumbling block, according to the word on the street, is Bre-X’s insistence that any proposed deal be put to a vote by its shareholders. The Indonesian government has also drawn criticism for its interference in the matter, particularly as other parties, including Teck and Placer Dome, are known to be interested in Busang. Favored suitor Barrick got a boost of $3.40 to settle at $41.25, while rival Placer Dome was up $1.40 at $32.

At presstime, Vancouver-based Placer announced an agreement to fund a feasibility study on Etruscan Enterprises’ Samira gold deposit in Niger. The major also has an option to acquire a 51% interest in a land package of about 81 sq. km. surrounding Samira. If a commercial deposit is identified at Samira, a mining company would be set up to develop it. Placer Dome would hold 45.9% of this company, whereas Etruscan would have 44.1%. The remainder would be owned by the government of Niger.

TVX Gold was up 95 cents at $10.55 after reporting encouraging drill results from the Skouries copper-gold project in Greece.

Partners Arizona Star and Bema Gold released some new results from their equally owned Aldebaran copper-gold project in northern Chile. Bema, which shares common management with offspring Arizona Star, was up $1.40 at $8.10.

Base metals were generally lower on the week, with both copper and nickel off 3 cents per lb. and marginal declines in the prices of lead and zinc. Stock levels at the London Metal Exchange’s warehouses were generally higher, contributing to weakness in copper and nickel.

The metals and minerals sub-index was lower, falling 71.05 points to close Dec. 10 at 5,361.78. Falconbridge, the most actively traded of the base metal issues this week, bucked the downtrend by adding 20 cents to finish at $30.90. Parent Noranda fell $1.05 to close at $30.40. Also in decline were Inco, down 80 cents to $45.85, and Cameco, which was off $2 to $55.50.

Potash Corp. got another huge boost this week, up almost $10 at $117.55, which goes to show that investors and analysts are paying attention to mined commodities other than gold and base metals.