TORONTO - The Toronto stock market closed little changed Monday as early euphoria about China's decision to allow its currency to appreciate against the U.S. dollar faded by the end of the session.
The S&P/TSX composite index closed up 8.49 points to 11,936.08 after earlier racking up a gain of almost 150 points in the wake of the announcement.
The TSX Venture Exchange was down 15.15 points to 1,473.03.
The Canadian dollar also lost early momentum to move down 0.3 of a cent to 97.62 cents US.
China currently keeps the yuan artificially low to boost exports, giving the country's manufacturers an edge in selling cheaper exports to other countries and the announcement had raised hopes for a strong economic rebound.
But investors thought the initial reaction to the news was likely overdone while experts noted that any reform to China's currency policy would be gradual.
"While it's certainly good news, that China has deflected pressure on its currency by allowing it to rise slowly, all of the additional interpretation in terms of the strength of the global economy is probably overdone," said Kate Warne, Canadian markets specialist at Edward Jones in St. Louis
"Not that I don't believe the global economy is strong it's just that investors have sort of swung from pessimism a few weeks ago to optimism today and this is the typical market volatility we see with sentiment swings."
The health-care segment was the biggest percentage advancer amid news of major dealmaking that will see the country's largest publicly traded pharmaceutical company, Biovail Corp. (TSX:BVF), merge with California-based Valeant Pharmaceuticals International (NYSE:VRX).
The friendly deal between Biovail and Valeant offers shareholders of the U.S. company about US$3.2 billion worth of cash and stock. The combined company will be called Valeant Pharmaceuticals International Inc. but Biovail's current shareholders will own slightly more than half of all the stock and the corporate headquarters will be in Mississauga, Ont., where Biovail is based. On the TSX, Biovail shares advanced $2.15 or 14.46 per cent to C$17.02.
The base metals sector was up three per cent as the July copper contract in New York climbed six cents to US$2.94 a pound. Teck Resources (TSX:TCK.B) rose $1.28 to C$36.67.
HudBay Minerals (TSX:HBM) climbed 93 cents to $12.65 after the company appointed David Garofalo as its new president and chief executive officer. Garofalo has been most recently chief financial officer of Agnico-Eagle Mines Ltd. (TSX:AEM).
Transportation stocks rose along with mining stocks. Canadian National Railways (TSX:CNR) was up 57 cents to $64.23 and Canadian Pacific Railway (TSX:CP) climbed 74 cents to $62.17.
The energy sector drifted 0.23 per cent higher as the July crude contract on the New York Mercantile Exchange gained 64 cents to US$77.82 a barrel. Canadian Oil Sands Trust (TSX:COS.UN) was up 35 cents to $29.27.
The financials sector was positive, up 0.66 per cent. Manulife Financial (TSX:MFC) rose 27 cents to $16.81.
The gold sector was the major decliner, with the August bullion contract on the Nymex down $17.60 to US$1,240.70 an ounce. Barrick Gold Corp. (TSX:ABX) faded $1.15 to C$45.86 while Kinross Gold Corp. (TSX:K) was down 61 cents to $18.50.
New York indexes also lost strong early gains as the Dow Jones industrial average closed down 8.23 points to 10,442.41.
The Nasdaq composite index moved 20.71 points lower to 2,289.09 while the S&P 500 index lost 4.31 points to 1,113.2.
In other corporate news, shares in Telus Corp. (TSX:T) rose 34 cents to $40.33 after the telecom reached a tentative labour agreement with 1,000 call centre, office and maintenance workers in Quebec.
Western Copper Corp. (TSX:WRN) will ask Yukon's highest court to overrule a territorial board, which has rejected the company's application for a water licence at an open-pit copper project.
The Vancouver-based company had applied to the Yukon Territory Water Board in May for a licence for its Carmacks Copper Project. But the board said Western Copper's plan contained several critical flaws, including the use of unproven technology and inadequate plans to manage waste. Western Copper shares slipped two cents to $1.06.
Shares in Calgary-based oil and gas producer Compton Petroleum Corp. (TSX:CMT) lost six cents to 75 cents after it said that its common shares will discontinue trading on the New York Stock Exchange effective this Friday. The company will continue to trade on the Toronto Stock Exchange.
Compton said that as financial markets have become significantly more global and liquid, the benefits of a multiple listing have been reduced while substantially adding to the energy company's costs.
BP shares fell $1.43 to US$30.33 in New York after a public battle erupted between the oil company and one of its partners over who is responsible for huge oil spill in the Gulf of Mexico. The company hit back at Anadarko Petroleum Corp. following a statement on Friday accusing BP of gross negligence in operating the drilling rig. Anadarko said the joint operating agreement makes BP responsible to co-owners for any damage due to gross negligence or wilful misconduct while BP countered that all the partners shared in liability for damage resulting from exploration in Mississippi Canyon Block 252.
