STOCK MARKETS — TSE slides slowly south in moderate trading

Interest rate fears caught up with the Toronto Stock Exchange last week, throwing the TSE 300 index for a 3.5% loss over the report period ended Dec.

17. The composite index fell 209.66 points to close at 5,710.20, and is more than 5% off from the record high it set in late November.

Trading volumes were moderate, and, in a sign that investors are nervous, the lightest trading came on Dec. 16, the only day the exchange rose. Most sectors of the market declined, prompting a big loss in the conglomerates sub-index as investors rushed out of the holding companies.

The Loony continued to slide against the U.S. dollar over the same period, reaching US73.17 cents at noon on Dec. 18 for a loss of one quarter of a cent. Along with the mark and other European currencies, the Canadian dollar was left in the dust of surging greenbacks and pounds. Although the Bank of Canada held firm on interest rates, a number of commercial lenders bumped their long-term rates, as if anticipating a rate hike from the central bank.

Gold settled into a new trading range this week, reaching US$369 per oz. on the Dec. 17 morning fix for a slide of 60 cents over the previous week.

Platinum, on the other hand, recovered $1.75 from the debacle of the previous week, finishing at US$371 per oz. Silver was off 2 cents on the week to close at US$4.85 per oz.

The gold and precious minerals sub-index was off 398.73 points to close at 11,174.95, a loss that closely matched the broader market.

Bre-X Minerals, newly admitted to the sub-index, saw a whopping 22.7 million shares trade as speculation continued about a possible deal with Barrick Gold and the security of its Busang contract of work in Indonesia. The companies announced that they had submitted a development proposal for the Busang gold deposit and await the government’s reply. Press reports speculated that Bre-X would end up with a 22.5% interest, while Barrick would hold 67.5% and the Indonesian government, 10%. No reliable information has been released yet.

Bre-X fell 80 cents to finish Dec. 17 at $19.85, while Barrick was 50 cents lower at $40.75. By presstime, Bre-X had fallen another 25 cents to $19.60 and Barrick another 15 cents to $40.60.

One of Bre-X’s true loves, Placer Dome, was also heavily traded, with 4.8 million shares changing hands this week. In a week when hope faded that the Indonesian government would allow Bre-X to arrange its own marriage, Placer lost $1.25 to close at $30.75.

The middle-tier golds were mostly lower, with Kinross Gold off 20 cents to $9.65 and TVX Gold down 40 cents at $10.15. Cheque-cashers suffered as the gold price continued to fall, with Franco-Nevada down 70 cents at $53.90 and Euro-Nevada off $1.75 at $35.

The base metals were mostly weaker, with copper off 6 cents to close at US98 cents per lb. in the London Metal Exchange morning session on Dec. 18. LME warehouse stocks of copper, which had fallen below 100,000 tonnes, have risen for three successive weeks and are acting on the price. Nickel was also lower, falling 10 cents to US$2.93 per lb., while zinc was steady. Lead was only fractionally higher.

The metals and minerals sub-index lost 267.03 points, about 5% of value, as it put together a 5-day losing streak. Inco, traditionally the flagship of the index, fell $3.20 to $42.65, a sign that large “sector” investors might be leaving the market. Noranda was off $1.20 to $29.20, Cameco descended $2.10 to $53.40, and Cominco fell $2.80 to close at $31.60. Two smaller companies went upstream instead; Aur Resources added 15 cents to close at $7.95 and Inmet Mining tacking on the same amount to close at $6.65.

Among the juniors, Adrian Resources fell $1.80 to close at $2.10 on the news that Teck had completed a negative feasibility study on the Petaquilla project in western Panama. Corriente Resources was up $1.55 to close at $12.35 after an Argentine court ruled in its favor on a land dispute with Teck and Vancouver-listed Mansfield Minerals.

On the Montreal board, Q.E.X. Resources, which has a number of projects in the lead-zinc belt of western Quebec, was up 15 cents to 35 cents. J.A.G.

Mines, which is working on a project to recover precious metals from wastes near the Royal Canadian Mint, was 59 cents lower at $1.67.