STOCK MARKETS — Weaker U.S. economy fuels TSE’s rise

An unexpected increase in the U.S. jobless rate in January brought investors back to the markets, which helped the Toronto Stock Exchange post a significant gain over the 5-day report period ended Feb. 7. The composite 300 index jumped 83.51 points to close at 4,100.99.

The unexpected increase in the jobless rate to 5.7% from 5.4% may signal a long-expected slowdown in the U.S. economy, easing fears of inflation. Moreover, signs of weakness in the U.S. economy may put an end to the steady increase in interest rates.

The U.S. news helped strengthen the Canadian dollar to US71.63 cents, an increase of more than half a cent on the week.

Stability in the dollar allowed the Bank of Canada to reduce the bank rate by 31 basis points to 7.92%, its second consecutive weekly drop. Gold bullion, however, continued to lose ground, with the London afternoon fix on Feb. 8 set at US$374.60 per oz., down US$1.65 from a week ago. Despite the decline in bullion prices, senior gold producers managed to gain ground, with Barrick Gold jumping 63 cents to $28.75, Placer Dome adding 50 cents to close at $27, and Echo Bay Mines remaining unchanged at $13. Toronto-based gold producer Hemlo Gold Mines posted record year-end earnings of $64.5 million (67 cents a share), primarily as a result of high gold production and a weak Canadian dollar. Gold production from the Golden Giant and Silidor mines was up 7% to 488,900 oz., while the price in Canadian funds received by the company for an ounce of the yellow metal rose 10% to $523. Hemlo shares added 13 cents to close at $11.87.

Investors were quick to dump the shares of major metal companies, as base metal prices slumped on news that U.S. commodity funds were liquidating contracts on the London Metal Exchange (LME). Inco and Teck B shares each lost $1 to close at $36.75 and $22.38, respectively, while Sherritt dropped 50 cents to $13.

One metal miner to buck the trend was Falconbridge, which tacked on 25 cents to close at $22. The share price was buoyed by a report that the company plans to spend $486 million developing the Raglan nickel project in the Ungava region of northern Quebec. The project, which is expected to be fully operational by mid-1998, will produce about 20,000 tonnes of refined nickel per year.

Hot new assays from the Voisey Bay nickel discovery in northern Labrador propelled Diamond Fields Resources to a new 52-week high of $14.50. The issue closed at $12.88, up $1.63 on the week. The best hole in the 4-hole program returned a 104.3-metre intersection grading 3.95% nickel, 2.84% copper and 0.14% cobalt. Unfortunately, the drill results were overshadowed by an ongoing dispute with a Labrador aboriginal group.

Montreal-listed Armistice Resources announced it had received positive results from the underground development program at its gold property in Virginiatown, Ont. Drilling from the 2,050-ft. level located the faulted extension of the 185N zone, returning values of up to 0.59 oz. per ton over a true width of 30.1 ft. In addition, a new mineralized zone was located about 20 ft. south of the 185N zone; it yielded 0.14 oz. over a true width of 17 ft. Joint-venture partners Aurizon Mines and Louvem Mines announced positive production and exploration results from their Beaufor mine project near Val d’Or, Que. An increase in production was attributed to disseminated wall rock mineralization and ladderwork veining. In addition, deeper drilling on the property has confirmed the continuity of the mineralized structure to a depth of 2,300 ft. below surface. Shares of Louvem added 3 cents to end at 42 cents while Aurizon shares closed at 75 cents, off 1 cents.

West African explorer International Gold Resources announced that independent consultants have determined that the company’s Bibiani gold project in Ghana contains a potential resource of 2.4 million oz. to the 500-ft. level. International Gold jumped 35 cents to end the week at $4.15.