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CA-BUSINESS Summary

01/12/08

TSX suffers biggest net drop ever

TORONTO (Reuters) - Toronto's main stock index tumbled 864 points on Monday, its deepest net drop ever, as sliding commodity prices, gloomy U.S. economic news and the urge to take profits after six straight days of gains prompted a sell-off that hit every market sector. Resource issues led the market lower as OPEC's deferral of any new oil supply cuts stung energy shares. U.S. crude sank $5.15 to $49.28 a barrel, its lowest settlement since May 2005.

Canada opposition says no price tag yet for stimulus

OTTAWA (Reuters) - Canada's opposition parties promised on Monday that their proposed coalition government will move quickly to stimulate the economy, but they were unable to estimate the cost of their plans. The opposition parties -- the Liberals, New Democrats and Bloc Quebecois -- which have accused to the Conservative government of not doing enough to help the economy, said they will direct aid to the automobile and forest industries.

Economy, not Q4, is key question for banks

TORONTO (Reuters) - Most Canadian banks left little to the imagination with recent quarterly profit warnings, so an obvious question hangs in the air: how much will a recession ding next year's numbers? The focus is shifting from how the credit crunch hurt the banks' U.S. loan books and capital markets businesses, to how their basic banking operations will manage through a downturn.

U.S. automakers rush to finish plans for Congress

DETROIT/WASHINGTON (Reuters) - U.S. automakers led by General Motors Corp on Monday rushed to finish restructuring plans demanded by Congress before lawmakers reopen the debate this week on the $25 billion in emergency funding the industry says it needs to survive. GM's board began to review the top U.S. automaker's revamped business plan on Sunday and has been asked to endorse steps that include consideration of dropping or selling off the Pontiac, Saab and Saturn brands, according to people with knowledge of the plan, which will be announced on Tuesday.

Economy rebounds, but recession seen

OTTAWA (Reuters) - Canada's economy grew at a faster clip than expected in the third quarter, just before the global financial crisis intensified, as a rebound in goods-producing industries offset weak exports and consumer spending. Statistics Canada said on Monday that Canada's gross domestic product expanded 1.3 percent on an annualized basis in the third quarter, beating the market forecast of 1.1 percent growth, after stagnating in the first half of the year.

U.S. in recession, Europe backs spending hikes

WASHINGTON (Reuters) - The U.S. economy has been in a recession for a year, the nation's business cycle arbiter declared on Monday, while European leaders vowed to step up public spending to try to cushion a deepening downturn. Economic data showed factories were slashing output in the United States, Europe and China last month as demand dropped, boosting expectations that central banks around the world will keep lowering short-term interest rates in the coming weeks.

Oil drops 9 percent to $49 as OPEC defers cuts

NEW YORK (Reuters) - Oil plunged more than 9 percent to $49 a barrel on Monday after OPEC deferred a decision on new supply cuts at a meeting over the weekend. The producer group delayed a decision on output until later this month as Saudi Arabia and other Gulf members called for greater compliance with existing cuts agreed to since September to help stem oil's fall from highs over $147 a barrel struck in July.

Air Canada gets cash from frequent flyer partner

CALGARY, Alberta (Reuters) - Air Canada said on Monday that Groupe Aeroplan Inc , the operator the airline's frequent flyer plan, has agreed to speed payment for reward tickets issued under the plan, raising C$70 million ($56.6 million) for the cash-strapped carrier. Air Canada, the country's biggest airline, said in a statement the payment is for reward tickets issued by Aeroplan through May 29, 2009. The airline also said Air Canada and Aeroplan have also agreed to unspecified "commercial terms that are beneficial to both parties."

Loonie falls as political doubts outweigh data

TORONTO (Reuters) - The Canadian dollar fell against the U.S. dollar on Monday as political uncertainty and a bleak economic outlook outweighed a report showing Canada's economy registered its strongest growth in a year in the third quarter. Canadian bond prices rose on a safe haven bid in response to falling equity markets.

Coalition govt would present early budget

OTTAWA (Reuters) - Canada's opposition Liberals said on Monday that if they form a coalition government to replace Prime Minister Stephen Harper's Conservatives, the new government would introduce a new budget as quickly as possible and it would run a temporary fiscal deficit. "We'd aim to get it out the very earliest possible -- certainly not later than the government's date of January 27," Liberal legislator John McCallum told reporters.

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