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Reuters Canada Business Summary

18/03/08

Air Canada, WestJet see few woes from U.S. economy

CALGARY, Alberta (Reuters) - Canada's two major airlines said on Tuesday they have yet to see domestic demand for air travel slacken because of the slumping U.S. economy, though fuel costs are a rising concern. Speaking at a Toronto investment conference, the chief executives of Air Canada and WestJet Airlines Ltd said domestic demand for air travel remains robust and there has been little sign so far of the turbulence that has roiled U.S. carriers.

CN Rail sets regional spending plans

VANCOUVER, British Columbia (Reuters) - Canadian National Railway Co laid out its regional spending plans on Tuesday for more than C$1.0 billion ($1 billion) in track and infrastructure work planned for North America this year. CN Rail, which had already pegged its total 2008 capital spending, including new locomotives, at C$1.5 billion, said it will spend C$430 million in Western Canada, and C$300 million in both Eastern Canada and the United States.

Jim Flaherty sticks with budget forecasts

TORONTO (Reuters) - Finance Minister Jim Flaherty said on Tuesday that Canada's economic fundamentals are strong and that he is comfortable with the growth forecasts the government put forward in the federal budget on February 26. "We continue to monitor growth forecasts, of course, but we are comfortable with the forecasts that we had in the budget that I presented," Flaherty told reporters in Toronto.

Toronto stocks rise, but off session high

TORONTO (Reuters) - Toronto's main stock market index jumped more than 1 percent at the open on Tuesday before scaling back, as investors picked up shares offering value after steep losses in the previous session. Investors were also in a buying mood ahead of the U.S. Federal Reserve's interest rate announcement later in the day.

Sherritt to buy Royal Utilities for C$700 mln

TORONTO (Reuters) - Canadian mining and energy company Sherritt International said on Tuesday it will buy out partly owned coal miner Royal Utilities Income Fund for about C$700 million and will use Royal's cash flow to expand its coal and other resource production. Sherritt already owns 41 percent of Royal and has offered to buy the rest for C$12.25 a unit, a premium of 22 percent over Royal Utilities' Monday closing price of C$10.03.

February inflation eases on lower car prices

OTTAWA (Reuters) - Canada's annual inflation rate eased in February, leaving the Bank of Canada in a comfortable spot if it wants to follow the U.S. Federal Reserve and slash interest rates aggressively amid growing market turmoil. Consumer prices rose 1.8 percent in February compared with a year earlier, down from 2.2 percent in January, as a smaller rise in gasoline prices and a robust Canadian dollar led to lower prices on some goods, Statistics Canada said on Tuesday.

Dollar firm after CPI data, awaits Fed move

TORONTO (Reuters) - The Canadian dollar rallied against the U.S. dollar on Tuesday after a domestic inflation report beat estimates, but gave up most of those gains ahead of an impending U.S. Federal Reserve interest rate decision. Domestic bond prices were pinned lower across the curve as U.S. equity futures pointed to a higher open, lessening the demand for more secure assets like government debt.

Fed poised to slash rates even as jitters ease

WASHINGTON/NEW YORK (Reuters) - Federal Reserve policy-makers opened a meeting on Tuesday that was expected to lead to the biggest one-day cut in interest rates since 1982, as two major Wall Street firms provided some relief to markets with better-than-expected earnings. Goldman Sachs Group Inc and Lehman Brothers Holdings Inc reported that profits fell less sharply than feared, boosting U.S. stocks ahead of an expected one percentage point cut in the Fed's base interest rate.

Luminus drops push to shift TransAlta strategy

CALGARY, Alberta (Reuters) - U.S. private equity firm Luminus Management LLC is dropping its high-profile push to get TransAlta Corp to load up on debt to fund stock buybacks, saying it is encouraged by the Canadian power generator's recent moves to boost its share value. Luminus, which owns 8.4 percent of TransAlta's stock, said on Tuesday it has withdrawn the slate of four director nominees it wanted on the company's board as well as a series of shareholder proposals aimed at forcing TransAlta to adopt a more debt-heavy capital structure.

Oil rebounds more than $2 ahead of Fed move

LONDON (Reuters) - Oil rebounded on Tuesday, after a slide from record peaks a day ago, on expectations that a Federal Reserve interest rate cut will hit the U.S. dollar and spur investor demand for oil. Other markets also rose ahead of the announcement expected from the Fed at around 2:15 p.m. EDT. European and U.S. shares rallied and gold rose 1 percent.

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