CANADA STOCKS-TSX may open lower as euro zone data, U.S. cuts weigh

Mon Mar 4, 2013 8:37am EST

Mar 4 (Reuters) - Toronto's main stock index looked set to open lower after data showed euro zone investor sentiment fell sharply and as automatic U.S. spending cuts officially took effect on Friday after political leaders failed to agree on steps to avoid them.

But TransCanada Corp shares are expected to get a boost from a positive U.S. report on the company's contentious Keystone XL pipeline, as are those of Canadian energy producers under pressure from deeply discounted heavy oil prices.

TOP STORIES

* Euro zone sentiment fell sharply in March, halting a six-month rise after an inconclusive election in Italy, the region's third- largest economy, rattled investors. Italy appeared to be inching toward another round of elections on Monday after centre-left leader Pier Luigi Bersani issued an ultimatum to 5-Star Movement leader Beppe Grillo to support a temporary government or "we'll all go home".

* President Barack Obama raised anew the issue of cutting entitlements such as Medicare and Social Security as a way out of damaging budget cuts, a White House official said on Sunday, as both sides in Washington tried to limit a fiscal crisis that may soon hit millions of Americans.

* HSBC is to increase dividend payouts this year, a sign that Europe's largest bank has regained its financial strength even though full-year profits fell more than expected.

* U.S. silver miner Hecla Mining Co will buy Aurizon Mines Ltd for about C$796 million to gain control of a gold mine in Quebec, nearly a month after the company rejected an unsolicited offer from Alamos Gold Inc.

* The Keystone XL oil pipeline got a boost on Friday when the U.S. State Department said the project would not likely change the rate at which Canada's oil sands are developed, discounting warnings from environmentalists that it would lead to a spike in greenhouse gas emissions.

MARKET SNAPSHOT

* Canada stock futures traded down 0.1 percent

* U.S. stock futures , , were down around 0.2 percent

* European shares, were mixed

COMMODITY PRICE MOVES

* Thomson Reuters-Jefferies CRB Index : 290.8866; rose 0.02 percent

* Gold futures : $1,578.2; rose 0.4 percent

* US crude : $90.73; rose 0.06 percent

* Brent crude : $110.53; rose 0.12 percent

* LME 3-month copper : $7,744; rose 0.53 percent

CANADIAN STOCKS TO WATCH

* Agrium Inc : The war of words between fertilizer maker and its biggest shareholder, Jana Partners, escalated with Agrium slamming the hedge fund's plan to split the company in a letter to investors ahead of its annual meeting next month.

* Canadian Oil Sands Ltd : The largest-interest owner in the Syncrude Project said that Syncrude's oil sands operations produced an average of 240,000 barrels per day in February, down about 13.5 percent from 277,600 bpd in January.

* DragonWave Inc : The telecom network equipment maker said revenue for the fourth quarter would miss its forecast, citing lower revenue from the microwave technology business it bought from Nokia Siemens Networks last year.

ANALYST RECOMMENDATIONS

Following is a summary of research actions on Canadian companies reported by Reuters.

* GMP Capital Inc : CIBC cuts to sector performer from sector outperformer and cuts price target to C$8 from C$9, does not expect the company's higher level of revenue to continue in the current quarter since transaction volumes have slowed.

* Lundin Mining Corp : RBC raises to outperform from sector perform and raises target price to C$6 from C$5.75, citing the company's solid operating results, growth in zinc and copper production, strong balance sheet and free cash flow.

* MCAN Mortgage Corp : National Bank Financial raises to outperform from sector perform and raises target to C$16 from C$14.50 on the company's strong results, lower balance sheet risk and expanded market presence.

* Toronto-Dominion Bank : National Bank Financial raises target price to C$94 from C$91 on the company's fourth-quarter results and increased quarterly dividend.

* TransCanada Corp : Canaccord Genuity raises target price to C$50 from C$49 after a report from the U.S. State Department said the company's Keystone XL pipeline would not have any substantial impact on the development of Canada's oil sands.

ON THE CALENDAR

* No major Canadian economic data scheduled for release

* No major U.S. events and data scheduled for release