Archive for March, 2009

TSX falls for 2nd straight day, still up on week (Reuters)

Wednesday, March 25th, 2009 | Finance News

TORONTO (Reuters) –
Toronto's main stock index closed lower on Wednesday as a slide in oil prices shook the weighty energy sector while disappointing debt auctions rattled U.S. stocks and hurt sentiment in Canada.

Oil prices fell after U.S. data showed crude stocks were at their highest levels since 1993, which sparked a selloff in energy issues, which make up about 22 percent of the Toronto Stock Exchange's main index.

Shares of EnCana Corp fell 2.5 percent to close at C$53.12, while Nexen Inc shares tumbled 4 percent to end the session at C$20.41.

Also weighing on investor sentiment was a debt auction that showed weak demand for the U.S. Treasury's five-year notes. Britain saw its first failed government debt auction since 2002.

"The markets came out of the gate a little strong and when there was no follow through in the morning, that coupled with weak treasury auctions and people started to take profits," said Bruce Latimer, a trader at Dundee Securities.

"But after the move on Monday we are still up on the week so it's just a bit of a consolidation period, and so I am not really too concerned about it."

The S&P/TSX composite index ended down 51.95 points, or 0.59 percent, at 8,797.44, off a session high that had the index up 1.5 percent about one hour after the open.

The TSX has fallen in the past two sessions but remains up 3.4 percent on the week thanks to a massive 5.3 percent gain on Monday when investors cheered a U.S. government plan to rid banks of toxic assets.

Latimer said another possible drag on the TSX in the latest session was the nearing of the month end, when investors tend to rebalance their portfolios.

Six of the 10 TSX sectors ended lower on Wednesday, with the financials index off 1.64 percent, while the energy sector was down 1.1 percent.

Shares of banks and insurers continued to weaken after a lengthy and meaty string of gains that left them ripe for investors to pocket gains.

Manulife Financial fell 3.6 percent to C$14.88, while Bank of Nova Scotia eased 2.3 percent to C$31.68.

The main drag on the index came from shares of BlackBerry maker Research In Motion, which fell 4.4 percent to C$52.39 after J.P. Morgan Securities started coverage of the company with an "underweight" rating and said it is already operating close to its peak earnings power.

The broader TSX composite is up 8.3 percent in March with just four sessions remaining in the month, which some experts feel is enough of a cushion to help the index record its first monthly gain since August.

"Month end is around the corner and if we can close where we are now, or close to where we are, it will be the first up month in quite some time," said Latimer.

"I don't see anything standing in the way of that, but that can change."

($1=$1.23 Canadian)

(Editing by Rob Wilson)

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Controversial AIG unit sees more departures: source (Reuters)

Wednesday, March 25th, 2009 | Finance News

NEW YORK (Reuters) –
Several more employees are leaving the controversial financial products unit that brought American International Group Inc (AIG.N) to its knees last year, according to a person with knowledge of developments there.

The resignations are in addition to the "handful" of senior AIG Financial Products executives who have already given notice, said the person, who could not quantify the total number of departures.

To date, AIG said the situation at the financial products unit remains "manageable," despite the departures. But if too many employees quit, Chief Executive Edward Liddy has warned it could be disastrous for AIG and, ultimately, for U.S. taxpayers who are the insurer's majority owners.

The financial products division incurred heavy mark-to- market losses on credit default swaps, a type of derivative that guarantees underlying debt against default, after the downturn in the U.S. housing market, leaving AIG so severely short of cash the U.S. government had to step in with a rescue that has since grown as large as $180 billion.

The credit default business was only a part of the financial products division, which is being shut down.

Employees there were promised retention payments more than a year ago, on condition they stayed long enough to wind down their areas of business, effectively working themselves out of a job.

But now some have changed their minds, fed up after 10 days of ridicule and scorn from lawmakers who broadly derided the bonuses, demonstrators picketing outside AIG offices and a threat by New York Attorney General Andrew Cuomo to publicly name anyone who did not return the bonuses.

The employees still working are not the ones who caused the large losses and "are being unfairly persecuted by elected officials," wrote Jake DeSantis, an executive vice-president for the Wilton, Connecticut-based financial products unit, in a resignation letter printed by the New York Times on Wednesday.

DeSantis said in the letter announcing his intention to quit the company after 11 years that many employees felt "betrayed" AIG asked them to give back the bonuses after numerous assurances the payments would be honored, and made no mention of revisions to pay and bonus agreements before the matter became a maelstrom on Capitol Hill.

Chief Executive Edward Liddy "deeply appreciates the frustration expressed in this letter and believes that the recent vilification and harassment of AIG employees is grossly unfair and unwarranted," said an AIG spokeswoman.

Liddy, appointed to run AIG after it received the federal bailout last September, last week told a Congressional subcommittee the reason the company paid to retain employees was to prevent "an uncontrolled collapse of that business," which still has $1.6 trillion in trading positions to unwind before it can close its doors.

"The financial downside for taxpayers is potentially very large and it's very real. And that's why we're winding down that business as quickly as possible," he said, adding that to "prevent undue risk exposure in the meantime, AIG has made a set of retention payments to employees."

As of last month, the financial products unit employed about 370 people at offices in Connecticut, London, Paris, Hong Kong, Tokyo and in India.

(Editing by Andre Grenon)

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IBM to cut 5,000 jobs in U.S. (Reuters)

Wednesday, March 25th, 2009 | Finance News

NEW YORK (Reuters) –
IBM will cut about 5,000 jobs in the United States, adding to similarly large cuts in the past few months, sources with knowledge of the matter told Reuters on Wednesday.

The job cuts will account for over 4 percent of IBM's U.S. workforce, which totaled around 115,000 at the end of 2008. The sources, who were not authorized to speak publicly on the issue, said the cuts will mostly be in IBM's global services business, which includes outsourcing and consulting services.

An International Business Machines Corp spokesman declined to comment. The company, which had a total workforce of 398,455 as of end 2008, has not disclosed how many jobs it has cut so far this year, but has said it was making "structural changes" to reduce spending and improve productivity.

IBM, which now earns around two-thirds of its revenue from outside the United States, has been expanding its workforce in emerging markets like India and China.

At the end of 2008, employment in the BRIC countries -- Brazil, Russia, India and China-- totaled around 113,000.

IBM has been hit by slower U.S. technology spending, although it has fared better than many rivals thanks to its global footprint and a decreased emphasis on hardware sales.

A month ago, IBM affirmed its full-year forecast of $9.20 earnings per share, and said contract signings for its business services had grown so far this year.

Wednesday's news also comes as IBM is in exclusive talks to buy Sun Microsystems Inc, according to sources familiar with the matter, a move that would create a clear leader in the high-end computer server market.

IBM shares fell 0.42 percent to close at $97.95 on the New York Stock Exchange.

(Reporting by Ritsuko Ando and Jim Finkle; Editing by Gary Hill)

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