STOCK MARKETS — TSE lives through another selloff — Metals and golds keep sinking as

broad market recovers

Like its counterparts around the world, the Toronto Stock Exchange was hit by a correction on Aug. 15. But the TSE 300 composite index rallied on Aug.

19 to recover most of the loss, closing at 6,715.88, down 92.62 points from its Aug. 12 close but up more than 60 points from its nadir on Aug. 18.

The market was pushed downstairs by fears that U.S. interest rates would rise to counterpoise renewed strength in the yen and the European currencies (accordingly, the top-heavy New York exchange and the Asian markets fell hardest), and some disillusioning earnings figures released to the American market also contributed. But most markets had recovered early in the following week.

Trading volumes on the TSE also told a story, as the Fateful Friday volume was held to a light 69 million shares, picking up to 98 million in the Aug.

19 rally.

The Canadian dollar sailed through the storm with little fuss, reaching US71.75 cents at noon on Aug. 20. It was higher against the deutschmark and the French franc, lower against the pound, and steady against the yen. Fears that the Bank of Canada will edge its rates slightly higher seem to have been discounted into the market already.

Gold mirrored the nervousness in the stock markets, trading as high as US$328.60 per oz. and as low as US$322 per oz. on the London bullion market.

Its low of US$322 per oz. in the Aug. 20 morning kaffeeklatsch represented a loss of $6.60 on the week.

Platinum and palladium, both of which had been walking on air for several weeks, came back to earth with a loud thump in the London fixing sessions of Aug. 19 and 20. Platinum lost $33.50 over the five trading days to close at US$406.50 per oz., and palladium was down $31.50 at US$196 per oz. over the same period.

The TSE gold and precious minerals subgroup didn’t share in the recovery felt by the broad market, partly as a result of the slide in the gold price, and partly because the market is expecting tough monetary action to counter inflation, the yellow metal’s best friend. The group index closed 189.28 points lower (2.2% of value) at 8,382.26. Placer Dome was 75 cents lower at $24.05 and Barrick Gold lost 95 cents to close at $31.85.

Kinross Gold, which had taken a writedown of US$24 million for its Macassa mine in Kirkland Lake, was down another 25 cents to finish at $6.10, while TVX Gold added 25 cents to close at $7.05 despite announcing a loss for the first half of 1997. Profitable Cambior fell $1.15 to $14.80. Eldorado Gold was the most active issue in the sub-group, falling 5 cents to close at $4.20 on a volume of 4.4 million shares.

The base metal markets saw a modest recovery by nickel to US$3.01 per lb., and continued strength in zinc, which added 3 cents to finish at US76 cents per lb. Copper slid to US99 cents from US$1.04 as warehouse stocks of the red metal continued to rise.

The TSE metals and minerals sub-group was even further behind the market trends than the golds, losing 120.42 points or 2.3% of value to finish the reporting period at 5,200.82. Copper-sensitive Noranda had the toughest time, falling $1.85 to close at $27.95. Rio Algom, another copper miner, shed 75 cents to close at $34.20, and Inmet was off 25 cents to $7.65 in light trading.

Inco fell 80 cents to $40.05, Falconbridge was 20 cents lower at $27.50, and Cameco slid $1.55 to $52.20 as investors looked elsewhere for bargains in the wake of the market selloff. The only large base metal miner to gain was Cominco, up a quarter at $38.

Among the Toronto juniors, Golden Rule Resources fell 35 cents to 80 cents, and American Gem lost 9 cents to close at 19 cents. On the Montreal Exchange, Azimut Exploration was 40 cents higher at $1.