In this April 25, 2012 photo, Nexen chief executive Kevin Reinhart addresses the company's annual meeting in Calgary. THE CANADIAN PRESS/Jeff McIntosh
July 23, 2012 - 8:39 AM
TORONTO - The Toronto stock market headed for a sharply lower open Monday amid concerns that Spain will need a full-scale sovereign bailout while traders took in two major acquisitions in the Canadian energy sector.
China National Offshore Oil Company is picking up Calgary-based oil and gas producer Nexen Inc. (TSX:NXY) for US$15.1 billion in cash. CNOOC is paying $27.50 a share, a 61 per cent premium on the closing price of its shares on Friday at the New York Stock Exchange.
And Talisman Energy Inc. (TSX:TLM) is selling its 49 per cent interest in U.K. North Sea assets to Chinese firm Sinopec Corp. for $1.5 billion.
The Canadian dollar was down 0.35 of a cent to 98.4 cents US.
U.S. futures were sharply lower as the yield on Spain’s benchmark 10-year bond surged to 7.56 per cent, its its highest level since the euro was established in 1999.
The Dow Jones industrial futures fell 140 points to 12,633 the Nasdaq futures lost 34.25 points to 2,579 and the S&P 500 futures were down 14 points to 1,344.2.
If Spain’s borrowing rates continue to rise then Spain may end up being locked out of international markets and be forced to seek a financial rescue, just like Greece, Ireland and Portugal.
On Friday, Spain’s eurozone partners agreed to lend the country up to €100 billion in funds to bail out banks laden down with toxic assets following the collapse of the country’s real estate bubble over the past four years.
Worries about how the worsening eurozone debt crisis could impact the global economy and a higher American dollar punished commodity prices.
The September crude contract on the New York Mercantile Exchange dropped $3.24 to US$88.59 a barrel.
Metal prices also backed off with September copper down nine cents to US$3.35 a pound.
And August bullion lost $13 to US$1,569.80 an ounce.
A stronger greenback usually helps depress commodity prices, which are denominated in dollars, as it makes oil and metals more expensive for holders of other currencies.
Spain's main stock market, Madrid’s IBEX, was off early lows but still off 2.8 per cent.
Elsewhere in Europe, London's FTSE 100 index dropped 1.72 per cent, Frankfurt's DAX was down 1.76 per cent and the Paris CAC 40 gave back 2.2 per cent.
A forecast from a Chinese central bank adviser that China’s economy could wane further in the third quarter also deepened concerns about the global slowdown. China’s economic growth slowed to a three-year low of 7.6 per cent in the second quarter.
Japan’s Nikkei fell 1.9 per cent, Hong Kong’s Hang Seng dived three per cent, China’s Shanghai Composite Index shed 1.3 per cent while South Korea’s Kospi dropped 1.8 per cent.
In other corporate developments, regulatory filings show that investor Prem Watsa now has a 9.9 per cent stake in BlackBerry maker Research in Motion Ltd. (TSX:RIM). Watsa is the CEO of insurer Fairfax Financial Holdings Ltd. (TSX:FFH). He had earlier reported a 5.12 per cent holding in RIM. Watsa’s stake was valued at about $356.2 million, as of Friday's closing on the TSX.
McDonald’s Corp. says it net income slipped four per cent in the second quarter as a result of unfavourable foreign currency exchange rates. Revenue fell short of Wall Street expectations as the fast-food chain cited a slowing global economy.
The world’s biggest hamburger chain earned US$1.35 billion, or $1.32 per share, missing estimates by six cents a share.
News from © The Canadian Press, 2012