Trading Summary: Markets tumble on 1/4-point rate cut from Fed

Trading across North America remained quiet until 2.00 pm, when the U.S. Federal Reserve Board announced that it was cutting the federal funds rate by 25 basis points to 3.5%. This is the seventh cut of the year and brings the total reduction to 3% so far this year.

The Fed says it remains concerned over continued weakening in U.S. business profits and capital spending.

The two big U.S. exchanges saw waves of selling following the announcement, with the Dow Jones industrial average closing down 1.41% to 10,0174.14 and the Nasdaq plummetting 2.66% to 1,831.30.

In Canada, the Toronto Stock Exchange sagged 0.69% to 7,473 points as fading tech star Nortel Networks nosedived 5% to another new 52-week low of $9.69.

The safe-haven Gold & Precious Minerals subindex was the TSE’s second-best performer of the day, rising 1.25% to 4,932.40 points — despite having gold close the day in New York trading down US$1.30 to US$274.70 per oz.

On the TSE, Barrick Gold rose 32 to $25.78, Placer Dome gained 47 to $17.50 and Franco-Nevada Mining slipped a penny to $20.44.

The Metals & Minerals subindex ended the day in the negative column, down 0.38% to 4,055.46. The decline was led by index heavyweight Alcan, which retreated 95 to $55.05.

The remaining majors had good days. Noranda rose 6 to $15.94, Teck-Cominco recovered 49 to hit $12.49, Inco gained 44 to $26.24, Falconbridge advanced 26 to $16.70 and Sherritt International added 7 to reach $4.97.

Canada’s junior exchange bucked the trend of the major bourses by posting modest gains across the board. The Canadian Venture Exchange managed to tack on 5.41 points, or 0.2%, to finish the day at 3,081.06. The Mining Index followed suit, climbing 13.01 points, or 0.2%, to close at 7,394.31.

Eurozinc Mining topped the most actively traded chart among junior explorers, climbing 2 to 18 on a heavy 1.13 million shares. The company recently completed a feasibility study on the Aljustrel base metal project in Portugal. Eurozinc is in the process of arranging the financing for new underground development and modifications to the existing mill facilities.

Poplar Resources continued to attract traders, ending the day down 1 to 27 on 322,000 shares. Stock in the junior has traded near a 52-week high since the announcement that the company’s 65% owned subsidiary North Star Diamonds completed a geophysical survey over the Bottenbacken polymetallic project in central Sweden.

The latest drill results from the West zone on the Ferguson Lake nickel sulphide property in Nunavut failed to lift shares of Starfield Resources. Stock in the junior ended the day flat at 50 on 134,000 shares. Starfield has three rigs turning on the project.

Brasilca Mining dropped to the lower levels of its 52-week trading range, down 2 on the day to 14 on 330,000 shares. Majors Teck and Inco are following up on airborne geophysical anomalies over Brasilca’s Tucuma copper-silver property in Brazil. Diamond drilling on the new targets is supposed to start this month.

Gold Canyon Resources tacked on 7 to $1.12 on 223,400 shares. The company recently launched a mapping and sampling program over the Cordero gallium project in Humboldt county, Nevada.

Investors ignored the latest drill results from the Magistral copper prospect in Peru as shares of Inca Pacific Resources ended the day unchanged at 27.