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TSX rallies on commodity strength, Flint Energy in focus

Toronto's main market saw some bullish action on Tuesday, as commodities rose on the back of China's moves to foster economic growth.

As of before 1:30pm ET, the S&P/TSX Composite Index gained 182.73 points, or 1.47%, to 12,641.03, while the more junior S&P/TSX Venture Composite rose 23.06 points, or 1.39%, to 1,681.21.

China's central bank said over the weekend that it would reduce the proportion of cash that banks must set aside by half a percentage point to 20.5% from February 24. The move to cut reserve ratios was done to encourage lending.

This is in contrast to the country's prior moves to tighten lending requirements over the last few years to control high inflation.

This helped support commodities, especially copper, as China is the world's biggest consumer of the metal, which is used in a wide range of businesses.

Meanwhile, markets were less enthusiastic about the agreed Greece bailout deal, which will see the compnay receive 130 billion euros to avoid a debt default and make a bond payment in March. After hours of talks, eurozone finance ministers finalized the deal to cut Greece's debt to 120.5 percent of GDP by 2020, just a fraction above the target.

Still, investors realized that even after private creditors took deeper writedowns, the country is still loaded up with massive amounts of loans.

Gold futures for April delivery were up 1.8% to $1,757.40 an ounce, while the silver contract jumped 3.39% to $34.41 an ounce.

Base metal copper rose 3.47% to $3.845 a pound, sending copper heavyweight Teck Resources (TSE:TCK.B) up 3.7%, while crude oil for March delivery gained 2.1% to $105.41 a barrel.

Metals and mining, materials, energy and financials were the four biggest gainers in Toronto on Tuesday, a day that also saw some acquisition activity.

US engineering company URS Corp (NYSE:URS) said Tuesday it will buy Canadian oilfield services firm Flint Energy Services (TSE:FES) for $1.25 billion in cash, to expand its presence in the oil and gas sector.

Under the deal unanimously approved by the two companies’ boards, Flint shareholders will get $25 a share — a 68 percent premium over the stock's Friday close. URS wil also assume $225 million in Flint debt as part of the transaction, the companies said in a joint statement. Flint shares jumped more than 66% on Tuesday, also lifting other energy services companies, including Trican Well Service (TSE:TCW), which rose over 4%.

Fortis Inc. (TSE:FTS) also said Tuesday that it agreed to acquire energy delivery company CH Energy Group (NYSE:CHG) for $1.5 billion in a deal that allows the company to enter the U.S. state-regulated electric and gas distribution business.

Fortis, a distribution utility holding company, said it will pay $65 in cash per share for CH Energy. The deal also includes the assumption of $500 million in debt upon closing.

Among those in the energy sector, Suncor (TSE:SU) and Talisman Energy (TSE:TLM) gained 1.93% and 2.65%, respectively.

In the gold sector, Kinross Gold (TSE:K) rose 4.2% and Barrick Gold (TSE:ABX) climbed 2.8%.

Among financials, Bank of Nova Scotia (TSE:BNS) ticked higher by 1.5%, while Royal Bank of Canada (TSE:RY) advanced 0.93%.

In other news, Anderson Energy (TSE:AXL) saw its shares jump 18% after the company provided an  operations update and announced a review of strategic alternatives.

On the economic front, Statistics Canada said retail sales fell 0.2% in December, following four consecutive monthly increases.

But wholesale sales rose 0.9% in December to $49.6 billion, due to higher sales for motor vehicle and parts, as well as for food, beverages and tobacco products.

US/Europe

US equities were mixed Tuesday after the Dow briefly crossed the 13,000 mark for the first time in nearly four years earlier today, as traders' reaction to the Greek debt deal was fairly muted. The Dow was lately up by 0.23% to 12,979.84, while the Nasdaq dipped in the red, and the S&P 500 was up 0.27%.

Investors also digested a host of quarterly numbers. Kraft Foods (NYSE:KFT) - whose products include Oreo cookies, Philadelphia cream cheese and Oscar Mayer deli meats - reported Tuesday fourth-quarter net profit of $830 million, or 47 cents per share, against $540 million, or 31 cents, in the year-ago period.

Revenue for the period rose 6.6 percent to $14.69 billion, against $13.77 billion in the year ago period. Adjusted profit was 57 cents a share, which included a negative one cent impact from foreign currency.

Adjusted profit met forecasts of analysts polled by FactSet Research, while revenue fell short of a forecast of $14.8 billion.

Home Depot (NYSE:HD), the world’s largest home-improvement retailer, posted fourth-quarter profit that exceeded analysts’ estimates as warmer weather helped spur an increase in residential spending.

Net income in the quarter ended January 29 increased 32 percent to $774 million, or 50 cents per share, from $587 million, or 36 cents, a year earlier. Revenue advanced 5.9 percent to $16 billion. Analysts projected $15.5 billion, the average of 19 estimates compiled by Bloomberg.

Analysts projected 42 cents, the average of 24 estimates compiled by Bloomberg.

Macy's (NYSE:M) said Tuesday its fiscal fourth quarter earnings rose 12 percent, largely on strong holiday sales.
For the three months that ended January 28, 2012, the retail giant, which operates under the Bloomingdale's and Macy's banners, said that adjusted for $54 million in pre-tax gains related to the 2006 sale of Lord & Taylor, earnings were $1.70 per share. Revenues for the latest quarter rose six percent to $8.72 billion, from $8.27 billion in the same period last year, as same store sales, or those of locations open at least one year, increased 5.2 percent.

Mylan (NASDAQ:MYL) said Tuesday that fourth-quarter earnings soared from a year-earlier period that was hit by litigation and other items as the pharmaceutical company's margins also improved.

Mylan - the world's third-largest generic-drug maker by sales - has seen its revenue jump in recent quarters as concerns about the economy spur interest in lower-cost health options. But the company's bottom line has been hampered by litigation and acquisition-related costs.

Dell (NASDAQ:DELL) is due to report its quarterly results after the closing bell. The computer maker is expected to report earnings of 52 cents per share.

European markets finished lower today with shares in Germany leading the region. The DAX was down 0.58% while Britain's FTSE 100 was off 0.29% and France's CAC 40 fell lower by 0.21%.