TSX to open lower as commodity prices give up gains

The loonie was down 0.54 of a cent to 100.28 cents US.

U.S. futures signalled a negative start to the session as the Dow Jones industrial futures moved down 104 points to 12,064. The Nasdaq futures fell 21.8 points to 2,374.8 while the S&P 500 futures dropped 13.9 points to 1,267.

Stock indexes surged last week after European leaders presented the broad outlines of a convincing anti-crisis strategy. The three-pronged strategy of boosting the bailout fund, getting private creditors to take a bigger hit on their Greek debt holdings and the banks to raise more capital was largely viewed favourably by the markets, though details need to be ironed out.

Relief that Europe was finally getting serious about the debt crisis sent the TSX surging 4.7% while the Dow industrials gained 3.57%.

However, after a few days of picking the plan apart, analysts wonder if the plan is big enough to work.

“It falls well short of resolving the crisis,” said BMO Capital Markets senior economist Sal Guatieri.

“It still leaves Greece saddled with too-much debt, expands the (bailout facility) to the bare minimum of what is deemed necessary should the five peripheral countries have difficulty refinancing their debts, and sees European banks raising capital to the bare minimum of what is deemed sufficient to withstand the potential losses on their sovereign debt holdings.”

Commodity prices backed off from significant gains last week as the December crude contract on the New York Mercantile Exchange lost 47 cents to US$92.85 a barrel after running up almost seven per cent last week.

Metal prices also declined while the December copper contract lost nine cents after improving demand prospects sent prices surging 15% last week.

Bullion was lower, down $23.30 to US$1,723.90 an ounce.

The rising U.S. dollar also pressured commodity prices. A stronger greenback usually helps depress commodity prices, which are denominated in dollars, as it makes oil and metals more expensive for holders of other currencies.

In Asia, Tokyo’s Nikkei 225 index closed 0.7% lower.

Elsewhere in Asia, mainland Chinese shares were mixed. The benchmark Shanghai Composite Index snapped a five-session winning streak by falling 0.2%.

European markets were negative as London’s FTSE 100 index lost 1.06%, Frankfurt’s DAX was down 1.51% and the Paris CAC 40 was down 1.47%.

Canadian Pacific Railway (TSX:CP) will be in focus at the open after U.S. hedge fund manager Pershing Square Capital Management disclosed after the markets closed Friday that his firm has bought 12.5% of the railroad. The move makes Pershing Square CP’s largest shareholder.

In other corporate developments, AbitibiBowater Inc. (TSX:ABH) posted a third-quarter net loss of $44 million, or 46 cents per share. That compared to a loss of $829 million, or $14.35 per share a year earlier. Sales came in at $1.22 billion from $1.19 billion.

TMX Group’s (TSX:X) board of directors has decided to support a $3.8 billion takeover bid that will see the owner of Canada’s stock markets acquired by a group of banks, insurance companies and pension funds. TMX chairman Wayne Fox said in a statement late Sunday that Maple Group offer “is in the best interests” of the company and its shareholders.