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DARREN YOURK

Thursday, March 13, 2003

— North American futures pointed to a strong start to the Thursday trading session, with late momentum from Wednesday still with investors who are mulling over the political wrangling surrounding Iraq and negative news from the U.S. retail sales report for February.

At 8:40 a.m. EST, Nasdaq 100 futures were up 8 points and sat 10.71 points above fair value, signalling gains for the Nasdaq Stock Market's composite index. The Nasdaq-100 pre-market indicator added 8.54 points or 0.88 per cent to 979.08, according to Nasdaq.com.

Standard & Poor's futures gained 4.6 points to sit 6.09 points above fair value, pointing to a similar start for the Dow Jones industrial average and S&P-500.

On Bay Street, the S&P/TSX composite index — which does not have a futures contract tied specifically to opening direction — will begin the Thursday session at 6,228.63, after a 62.10 point decrease Wednesday.

The U.S. Commerce Department said Thursday that sales at the nations' retailers were down by 1.6 per cent in February — the worst showing in 15 months.

The weakness in February was widespread, with losses reported for automobile dealers, electronics and appliance stores, apparel shops and other merchants. Building and garden supply stores posted a record drop in sales.

February's retail sales were weaker than economists were expecting. They were forecasting sales to fall by 0.5 per cent.

The United States is still seeking support for a resolution that contains a Monday ultimatum threatening war against Iraq. However, the White House has indicated it is considering the possibility of dropping the resolution, which faces the threat of French and Russian vetoes.

The Bush administration spent much of Wednesday wooing the 10 elected Security Council members and sending a cryptic message, saying U.S. President George W. Bush "will be disappointed" in those countries that block his plans.

Meanwhile, France indicated Thursday that it does not support a new British proposal setting out conditions for Iraq's disarmament, saying Baghdad must be given a realistic deadline to get rid of its weapons of mass destruction.

The British conditions "do not respond to the questions the international community is asking," Foreign Minister Dominique de Villepin said in a statement. "It's not about giving a few more days to Iraq before resorting to force but about resolutely advancing through peaceful disarmament.

On Bay Street, all eyes will be on Air Canada's shares which fell to a 52-week low amid analysts' warnings that the airline could file for bankruptcy protection this year.

Air Canada's shares fell 14 cents or 5 per cent Wednesday to close at $2.65, matching a 52-week low close previously set on Feb. 7.

The drop came a day after the airline reported that passenger traffic was down significantly in February because of concerns of a war and increased competition from its discount rivals.

The Canadian dollar begins the day at 67.80 cents (U.S.) after a 0.14 decline on Wednesday.

Corporate news

  • Bayer AG reported a 46 per cent fall in 2002 operating profit on Thursday and said liabilities over recalled anti-cholesterol drug Baycol could exceed insurance cover as lawsuits pile up. Shares in Germany's biggest drugmaker fell more than 5 per cent at one stage to their lowest level in over a decade on concerns over Baycol damages claims, which some analysts believe could reach $5-10 billion (U.S.). Although Bayer has product liability insurance, it admitted Baycol charges could exceed its cover if plaintiffs "substantially prevail" in the 8,400 lawsuits it is now facing.

  • The U.S. federal government has subpoenaed documents from Baxter International Inc. in connection with the deaths of patients who were on its kidney dialysis machines that became contaminated, the company said. Baxter is already a defendant in six civil lawsuits seeking damages from the company, it said in a filing with the U.S. Securities and Exchange Commission on Wednesday. The company, based in Deerfield, Illinois, said it has reached settlements with a number of the families of patients who died in Spain, Croatia and the United States after undergoing hemodialysis on the Baxter Althane series of dialyzers. But it said more lawsuits and claims might be filed in the United States or elsewhere.

  • South Korea's Samsung Electronics said on Thursday it plans to sell 52.5 million handsets in 2003, compared with just over 40 million in 2002. "Our business plan is to sell 52.5 million terminals," San-Jin Park, head of Samsung's mobile handset division, told journalists at CeBIT, the world's largest electronics trade show. He said the year had barely started, but signs so far were positive. "I will not disappoint in the first quarter," he said.

    Overseas action
    • Japan's benchmark Nikkei shed 0.94 per cent Friday to snap a five-day losing streak and end at 7,868.56. The broader, capital-weighted Topix index gained 1.03 per cent to 778.52. Hong Kong's Hang Seng lost 0.99 per cent to end at 8,787.5.

    • In afternoon European trading: London's FT-SE 100 index gained 3.75 per cent to 3,410.30. Paris's CAC-40 index had added 3.7 per cent to 2,492.06; Frankfurt's DAX index was up 3.22 per cent to 2,273.87.

    Major economic indicators
    • Canada: none scheduled

    • United States: retail sales (February)

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