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Toronto stock market to open positive, traders look to Fed for stimulus hints

A Toronto Stock Exchange ticker is seen at The Exchange Tower in Toronto on August 18 2011. THE CANADIAN PRESS/Aaron Vincent Elkaim

TORONTO - The Toronto stock market headed for a slightly higher open but resource stocks were likely to weigh on the TSX amid worries about a slowing global economy.

Rising prices for oil and metals pushed the commodity-sensitive Canadian dollar up 0.4 of a cent to 98.19 cents US.

U.S. futures rose as traders looked to the release of the minutes from the most recent U.S. Federal Reserve meeting for indications whether the central bank is considering another round of economic stimulus.

The Dow Jones industrial futures ran ahead 51 points to 12,636, the Nasdaq futures gained 7.8 points to 2,585.8 and the S&P 500 futures rose 4.8 points to 1,340.3.

Hopes for more action from the Fed have risen in the past week amid disappointing readings on the American manufacturing and service sectors and job creation numbers for June that were below even modest expectations.

Meanwhile, expectations are modest for second quarter corporate earnings.

Companies started reporting second-quarter results this week, with aluminum giant Alcoa reporting it beat reduced expectations.

Investors were dismayed when chip maker Advanced Micro Devices said Tuesday that weaker sales in China and Europe led to an 11 per cent drop in revenue in the April-to-June period. The company had previously forecast a gain of three per cent. J.P. Morgan and Google report results later this week.

Commodity prices gained ground after weak Chinese trade data sent oil and copper lower on Tuesday.

The August crude contract on the New York Mercantile Exchange gained $1.12 to US$85.03 a barrel.

Copper gained a penny to US$3.41 a pound while bullion declined $3 to US$1,576.80 an ounce.

European bourses were mixed as Spain’s government imposed further austerity on the country Wednesday as it unveiled sales tax hikes and spending cuts aimed at cutting €65 billion off the state budget over the next two and a half years.

The measures are in exchange for a bank bailout of up to €100 billion granted to Spain by the other 16 countries that use the euro. The country’s banks are saddled with billions of euros in toxic loans and assets following the collapse of the country’s real estate market.

London's FTSE 100 index slipped 0.09 per cent, Frankfurt's DAX rose 0.46 per cent and the Paris CAC 40 declined 0.46 per cent.

Earlier in Asia, Japan’s Nikkei 225 index fell 0.1 per cent, Hong Kong’s Hang Seng added 0.1 per cent, South Korea’s Kospi slipped 0.2 per cent, Australia’s S&P/ASX 200 was little changed and China’s Shanghai Composite gained 0.5 per cent.

In corporate news, Vancouver-based miner South American Silver Corp. (TSX:SAC) is protesting Bolivia’s decision to revoke its licence to mine a rich silver deposit in the country and nationalize the project. The licence was cancelled Tuesday following opposition from Quechua Indians who had seized workers employed by the company to press their case.

The stock has lost about half its value in the last two sessions, closing Tuesday at 49 cents on the TSX.

News from © The Canadian Press, 2012
The Canadian Press

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