Stocks look to head higher amid positive earnings; traders look to slew of data

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TORONTO - The Toronto stock market appeared set for a slightly positive start to trading on Monday as commodities rose and traders looked ahead to another slew of earnings news and important economic data.

The Canadian dollar sold off for a fourth session, down 0.3 of a cent to a six-month low of 99.05 cents US.

The dollar has tumbled almost 1 3/4 cents US since the Bank of Canada indicated Wednesday that it will be slower to raise interest rates than had been expected because of economic weakness.

The dollar has been supported in recent months partly on sentiment that the central bank might hike rates later this year. Data released Friday showing low inflation in Canada at the end of 2012 further suggested that investors will have to wait longer for the central bank to move. Higher rates tend to attract investors and push up the currency.

U.S. futures were slightly higher amid earnings from heavy equipment maker Caterpillar Inc. and the Dow Jones industrial futures rose 14 points to 13,826, the Nasdaq futures advanced 3.8 points to 2,731.8 and the S&P 500 futures added 1.75 points to 1,497.5.

Caterpillar's fourth-quarter profit fell 55 per cent to US$697 million, or $1.04 a share. The latest quarter included a previously-disclosed goodwill impairment charge of 87 cents a share.

Revenue dropped seven per cent to $16.08 billion, beating estimates of $16 billion. Ex-items earnings were $1.91 versus expectations of $1.69 and its shares were up 0.6 per cent in pre-market trading in New York.

A stronger than expected series of U.S. fourth-quarter earnings reports has helped push markets higher during January and this week the Canadian corporate earning season kicks into gear with some of Canada's biggest companies on investor radar.

Canadian Pacific Railway (TSX:CPR) and grocer Metro Inc. (TSX:MRU.A) report earnings results on Tuesday while Potash Corp. of Saskatchewan (TSX:POT) and Canadian Oil Sands (TSX:COS) hand in numbers on Thursday.

Elsewhere on the corporate front, Research In Motion Ltd. (TSX:RIM) unveils its new BlackBerry 10 product line in New York on Wednesday.

Economic news will also hopefully provide some direction for traders.

In the U.S., the Federal Reserve wraps up its two-day meeting on interest rates Wednesday. No one expects the central bank to move on rates but traders will look for clues as to when the Fed could wrap up its latest round of economic stimulus.

The Fed minutes from the previous meeting, released Jan. 3, showed a split among members over how long to continue the stimulus, known as quantitative easing. It involves the Fed buying bonds to support the U.S. economy, a move aimed at keeping interest rates low.

Some thought the program should be slowed or stopped before the end of 2013 amid concerns that the bond purchases would destabilize the economy.

The key piece of data for the week comes out Friday. Economists generally expect the U.S. non-farm payrolls report to show that the economy created 153,000 jobs during January, slightly below December's 155,000 reading.

Traders will also take in the latest readings on economic growth in Canada and the U.S. during the week.

Oil prices advanced with the March crude contract on the New York Mercantile Exchange ahead 34 cents to US$96.22 a barrel.

March copper rose two cents to US$3.67 a pound while February bullion was off 40 cents to US$1,656.20.

European bourses were mixed as London's FTSE 100 index added 0.05 per cent, Frankfurt's DAX declined 0.09 per cent and the Paris CAC was up 0.07 per cent.

Earlier, most Asian markets posted slight gains as Hong Kong’s Hang Seng rose 0.4 per cent.

Mainland Chinese shares ended higher, with the Shanghai Composite Index jumping 2.4 per cent while the smaller Shenzhen Composite Index gained 2.5 per cent.

Japan’s Nikkei was a standout, falling quite sharply amid profit-taking. The Nikkei in Tokyo opened higher but then slipped 0.9 per cent.

Organizations: TSX, Federal Reserve, Bank of Canada Canadian Oil Sands Research In Motion Ltd. Caterpillar Inc. Dow Jones Canadian Pacific Railway Metro Inc. Potash Corp of Saskatchewan Nikkei New York Mercantile Exchange FTSE 100 Shenzhen

Geographic location: U.S., TORONTO, Canada New York London Frankfurt Tokyo

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