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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.

National Bank gives $815 mln to ABCP credit line

VANCOUVER, British Columbia (Reuters) - National Bank of Canada said on Tuesday it has committed to contributing $815 million to a margin funding facility that is crucial to the successful restructuring of the country's nonbank asset-backed commercial paper market. National, Canada's sixth biggest bank, said its Tier 1 regulatory capital ratio will fall by about 15 basis points if the funding is implemented. But the ratio will still be "well above" its target of 8 percent.

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.

Fed cuts key interest rates by 3/4 point

WASHINGTON (Reuters) - The Federal Reserve slashed a key U.S. interest rate by three-quarters of a percentage point on Tuesday, a substantial cut but smaller than many in financial markets had expected, as part of an effort to hold off a deep recession and financial meltdown. The Fed's action, taken on an 8-2 vote of its policy committee, took the bellwether federal funds rate down to 2.25 percent, the lowest since February 2005. Financial markets had largely priced in a full point reduction.

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.

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 over $109

NEW YORK (Reuters) - Oil prices rebounded sharply on Tuesday to over $109 a barrel after the U.S. Federal Reserve deepened interest rate cuts to fend off a recession. The surge reversed heavy losses Monday that had been triggered by financial woes at investment banks, including Bear Stearns, which analysts said reflected weakness in the overall economy of the world's largest energy consumer.

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