Opening Bell: TSX fails to join global stock party

Jason Alden/Bloomberg

The Toronto Stock Exchange failed to post the strong gains recorded by its U.S. counterparts Friday.

The Opening Bell is our daily snapshot of the stock markets, including a wrap up of the must-read business stories for the day.

The TSX sputtered Monday morning as flat commodity prices led to a weak open, sinking expectations the index would start the day with the type of strong gains recorded by U.S. markets on Friday.

While Wall Street closed the week with its best weekly performance in two years, negligible  commodity price gains led to a relatively flat open for the TSX. Crude futures, gained only 0.12% a barrel to US$95.05. Gold posted a similarly modest gain, rising 0.8% to US$1,494.40 an ounce.

Here is a look at what the markets were doing just after the opening bell on Monday, July 4:

The Dow Jones was closed for July 4.
The S&P 500 was closed for July 4.
The Nasdaq was closed for July 4.
The S&P/TSX gained 5.20 points, or 0.04%, to 13,301.29

Here are the stories that will be impacting trading throughout the day:

S&P warning adds default threat to Greece bailout

Greece would likely be in default if it follows a debt rollover plan pushed by French banks, S&P warned on Monday, deepening the pain of a bailout that one European official said will cost Athens sovereignty and jobs. http://natpo.st/lECXre

Factory prices fall in May

Slack global demand for industrial metals dampened Canadian producer prices in May, Statistics Canada said on Monday. Industrial product prices edged down 0.2% from April, below the flat reading predicted by analysts. http://natpo.st/iFYCUU

Morgan Stanley lifts emerging market outlook

Emerging-market investors should raise their stock holdings, Morgan Stanley said, citing “attractive” valuations and the prospects of a “stronger” second-half performance for Asian and developing-nation shares. http://natpo.st/lqnXP2

Yuan hits all-time high vs. dollar

The yuan hit a record high against the dollar on Monday after the People’s Bank of China fixed a historically strong mid-point, but the market remained cautious about the pace of yuan appreciation. http://natpo.st/kQDpHx

Sun Life CEO to retire

Sun Life Financial Inc. said Monday that CEO Donald Stewart is retiring as of Nov. 30. Mr. Stewart will be replaced by Dean Connor, the company’s chief operating officer, who has been promoted to president, effective immediately. As of Dec. 1, Connor will hold the title of president and CEO. http://natpo.st/jYTxBT

Also, be sure to check out our in-depth overview of Canadian stocks to watch, analyst recommendations and other market advice: http://natpo.st/jHkD2z

Italian watchdog to investigate bank stock plunge

Paco Serinelli/AFP/Getty Images

A view of the Italian stock market Borsa, based in Milan.

Bloomberg News  Jun 24, 2011 – 12:16 PM ET | Last Updated: Jun 24, 2011 1:59 PM ET

Italy’s markets watchdog said it will investigate trading in bank shares after the country’s biggest lenders posted their largest decline in two years.

Part of the slump was due to automatic stop-loss trades, an official for the regulator said by telephone today. The watchdog hasn’t ruled out market manipulation. UniCredit SpA, Italy’s biggest bank, and Intesa Sanpaolo SpA, the second-largest, led lenders lower, falling 5.5% and 4.3% respectively. Both stocks were briefly suspended after breaching limits on intraday swings.

Bank stocks tumbled amid concern the European debt crisis may spread just as lenders face scrutiny from regulators over capital levels. Italian 10-year bonds also fell, increasing the additional yield investors demand to hold the securities over benchmark German bunds to the most since the euro was introduced in 1999. European leaders meeting in Brussels today attempted to staunch the crisis, vowing to stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of budget cuts next week.

“Contagion fears keep re-emerging as long as credible, lasting solutions in Greece are pending,” said Christian Weber, a Munich-based strategist at UniCredit.

Officials at Intesa Sanpaolo and UniCredit in Milan declined to comment. Intesa closed down 7.6 euro cents at 1.707 euros and UniCredit fell 8 cents to 1.363 euros, its lowest price since April 2009.

Silvio Berlusconi

Moody’s Investors Service said yesterday it may downgrade 13 Italian banks because they are vulnerable to a cut in the government’s credit rating. The firm had said last week it may cut the sovereign rating because the turmoil in Europe could drive the country’s borrowing costs higher.

“The downgrade by Moody’s may be furthered to encompass the long-term debt,” said Thomas Laschetti, a trader at Tullett Prebon Ltd. in London. “That is enough to create the right environment for deleveraging exposure to the sector.”

Prime Minister Silvio Berlusconi said today the country’s banks are “well capitalized.” Speaking at a summit of European leaders in Brussels, Berlusconi said he wasn’t worried about Moody’s comments about the country’s banks.

Intesa and UniCredit are among the five Italian banks that are also being stress-tested by European regulators next month to assess whether they have sufficient capital.

The European Banking Authority yesterday updated its stress tests to take into account extra trading losses that banks may face on their holdings of sovereign debt from crisis-hit European Union countries including Greece.

Remaining Uncertainty

Italian banks are also seeking to raise money from investors to bolster capital. Unione di Banche Italiane ScpA, Italy’s fourth-biggest bank, fell 0.9% to 3.784 euros. The lender may struggle to lure buyers to its 1 billion-euro ($1.4 billion) rights offering, which closes today. The bank is selling eight new shares at 3.808 euros for every 21 held.

“There is still uncertainty surrounding the sovereign risk and bank capital requirements,” said Paul Vrouwes, who helps oversee about 20 billion euros of shares at ING Investment Management in The Hague. “Italy’s economy is struggling more than other nations.” He doesn’t plan to buy UBI stock.

Banca Monte dei Paschi di Siena SpA, which is seeking to raise 2.2 billion euros in a rights offering that runs through July 8, fell as much as 5% to 51.95 euro-cents, a record low. The shares are available for 44.6 euro-cents in the offering.

European Central Bank President Jean-Claude Trichet said this week that the link between the region’s debt crisis and its lenders is “the most serious threat” to financial stability in the European Union.

Bloomberg News