Miners, BlackBerry take TSX lower amid relief over Cypriot bailout deal

TORONTO – The Toronto stock market turned lower late-morning Monday amid a muted response to a weekend deal for Cyprus that aims to prevent the country from sliding into bankruptcy and ditching the euro currency.

The S&P/TSX composite index edged 30.01 points lower to 12,727.34 with smartphone maker BlackBerry a major weight ahead of its earnings release later in the week.

Indexes had been higher earlier in the session after Cyprus clinched a €10-billion bailout after lengthy negotiations with the so-called troika of creditors — the International Monetary Fund, the European Commission and the ECB.

But in order to get the money, Cyprus had to come up with €5.8 billion on its own. The bulk of that money is now being raised by forcing losses on holders of large bank deposits, with the remainder coming from tax increases and privatizations.

The European Central Bank had threatened to cut off crucial emergency assistance to the country’s banks by Tuesday if no agreement was reached.

The country’s second-largest bank, Laiki, will be restructured, with all bondholders and people with more than €100,000 in their bank accounts facing significant losses.

“As often happens, you get a bit of a knee jerk response and then a little sober second thought afterwards,” said Bob Gorman, chief portfolio strategist at TD Waterhouse.

He said wasn’t a huge surprise that there was a deal “and now we move on.”

The Canadian dollar was also down from the highs of the session and late in the morning the currency was up 0.16 of a cent to 97.88 cents US.

U.S. indexes also lost early traction as the Dow Jones industrials lost 54.02 points to 14,458.01, the Nasdaq was down 8.59 points at 3,236.41 and the S&P 500 index dipped 3.01 points to 1,553.88.

The focus will likely remain on developments surrounding Cyprus for awhile yet. In particular, investors will be interested to see the level of withdrawals from the country’s banks when they reopen. That’s scheduled for Tuesday.

A longer-lasting concern though is how the Cyprus deal plays out in other countries, notably those at the forefront of Europe’s debt crisis. Analysts warned there is still a risk of contagion spreading to other weak eurozone countries such as Spain, Italy and Greece.

Early strong gains on European bourses also evaporated as London’s FTSE 100 index edged up 0.1 per cent, Frankfurt’s DAX was up 0.03 per cent and the Paris CAC 40 index declined 0.6 per cent.

The base metals sector led decliners, down 1.4 per cent with May copper off a penny at US$3.46 a pound. First Quantum Minerals (TSX:FM) dropped 47 cents to C$19.65.

The tech sector dropped 0.84 per cent as shares in smartphone maker BlackBerry (TSX:BB) fell for a second session in a row ahead of the release of its quarterly earnings on Thursday. Its stock was off session lows but still down 64 cents, or 4.2 per cent, to $14.55 on top of an eight per cent slide Friday as the smartphone maker’s new Z10 product officially went on sale in the U.S.

The company’s fourth-quarter earnings give a glimpse into how well the smartphones are selling in Canada, the U.K. and India, though details on its U.S. launch and other markets won’t be part of the financial report until the next earnings period.

“On balance, I think the numbers will be pretty decent — it’s going to be a loss, which is not unexpected but the sales numbers are going to be the story here,” added Gorman.

“We have had mixed sentiment with respect to very very early responses. I don’t think you’re going to see anything conclusive there until the keyboard equipped device comes out a little later on.”

The gold sector dropped one per cent as April bullion fell $9.70 to US$1,596.40 an ounce. Goldcorp Inc. (TSX:G) lost 29 cents to C$34.04.

The May crude contract on the New York Mercantile Exchange up $1.70 to US$95.41 a barrel. The energy sector was down 0.26 per cent as Cenovus Energy (TSX:CVE) dropped 26 cents to C$31.676.

In other corporate news, Dell plans to negotiate with Blackstone Group and investor Carl Icahn over new acquisition bids for the computer maker that rival an offer of more than US$24 billion from investors led by founder Michael Dell. Dell and Silver Lake Partners have offered to buy the company for $13.65 per share. Buyout specialist Blackstone is proposing to buy the company for $14.25 per share. Icahn wants to buy up to 58 per cent of Dell’s shares for $15 each. Icahn and other investors have criticized Michael Dell’s bid as too low.

AltaGas Ltd. (TSX:ALA) has agreed to pay US$515 million to purchase Blythe Energy LLC, which owns a 507-megawatt electricity generation plant and associated transmission line in Southern California. Its shares fell $1.19 to $34.85.