STOCK MARKETS — TSE languishes as summer slump settles in

The dog days of summer are upon us, leaving the Toronto Stock Exchange listless and tranquil. The TSE 300 composite closed at 4,586.92 points, down 32.31, for the 5-day report period ended Aug. 1.

Signs that the Canadian economy continues to perform well caused the Bank of Canada to increase its trend-setting rate, and Statistics Canada reported that the gross domestic product for May rose by 0.3%. The Bank raised its key rate by 15 basis points to 7.02%, up for the third week in a row.

The rate boost was also partly due to a selloff of the Canadian dollar. During the week, the dollar experienced a 1-day drop of six-tenths of a cent before the Bank intervened. Our dollar ended the week at US73.1 cents, down US0.67 cents.

Both the metals and minerals sub-index and its gold-and-precious-metals counterpart continued on their downward trends, posting modest losses.

The metals and minerals sub-index dropped 1.9% and closed at 4863.35 points, while the precious metals sub-index remained relatively flat, edging downward by 0.1% from the previous week’s close to end at 10,695.59 points.

Prices of precious metals were lower, with the London morning gold fix for Aug. 2 set at US$382.65 per oz., down US$3.15. Platinum also closed lower, dropping US$8.50 to end at US$422.00 per oz., while the silver fix closed unchanged at US$5.15 per oz.

Senior golds were mixed on the week, with Barrick Gold adding 75 cents to close at $35.38 and Placer Dome losing $1 to end at $35.25. Listless gold performers included Echo Bay Mines and Hemlo Gold Mines, both of which remained unchanged at $13 and $14.25, respectively.

Barrick agreed to buy a 10% interest in the Argentine unit of Vancouver-based Pacific Rim Mining for $1.5 million. The senior also has an option to acquire up to an additional 60% in the unit, which holds various property interests in the province of Salta.

Closer to home, Goldcorp released the latest round of drill results from its Red Lake mine. The Main zone of mineralization has a vertical continuity of 1,200 ft., and the latest assay results indicate the East South C-3 sulphide zone has been intersected in several holes on the 34th and 38th levels. Mineralization has been cut updip as high as the 30th level; yet, despite the results, Goldcorp shares dropped 50 cents to close at $14.63.

An earthquake in the northern Chilean port of Antofagasta sent copper prices on a roller-coaster ride during the report period. Perceived interruptions of supply caused the price to rise, but as concerns faded, the red metal shed some of its earlier gains. At the end of the week, the Grade A London Metals Exchange price per pound for the red metal managed a meager US1 cents gain, closing at US$1.35. The nickel price also rose, with the LME settlement price per pound adding US3 cents to close at US$3.91.

News from Aber Resources to the effect that the A-154 kimberlite pipe may hold $7 billion worth of diamonds helped the issue post a healthy gain of 63 cents. Aber closed at $10.83.

Meanwhile, the fight for control of Eldorado entered another round. The company’s management advised shareholders not to accept the latest bid from Glamis Gold, suggesting the offer was “financially inadequate.” At the same time, it indicated it was negotiating another deal with other, unnamed companies. Meanwhile, Glamis has applied to the Ontario Securities Commission to block Eldorado’s shareholder rights protection plan. Glamis shares shed 13 cents to close at $10.13, while Eldorado shares lost 25 cents to end at $5.38.

Meanwhile in Montreal, MSV Resources and Cache Explorations have announced intentions to merge. MSV will issue one share for every four Cache shares held. The merger will enable MSV to accelerate financing and further develop the Corner Bay project near Chibougamau, Que. MSV shares shed 4 cents to close at $2.21, while Cache added 3 cents to close at 53 cents.