Stocks cautious, G20 finance ministers get set to deal with currency worries

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TORONTO - The Toronto stock market headed for a slightly higher open Friday as traders look to a meeting of G20 finance ministers this weekend that looks set to be dominated by worries that countries are using their currencies for economic gain.

The Canadian dollar was down 0.14 of a cent to 99.74 cents US.

U.S. futures were lower ahead of January industrial production data and the University of Michigan's latest take on consumer sentiment.

The Dow Jones industrial futures dipped 11 points to 13,939, the Nasdaq futures were down two points to 2,765.2 while the S&P 500 futures shed 1.75 points to 1,516.75.

The meeting in Moscow takes place amid speculation of a "currency war", where countries competitively devalue their currencies to gain a competitive edge.

"Markets have taken on a generally cautious tone as finance ministers and central bankers from across the G20 begin talks in Moscow on Friday with currencies taking centre stage," said BMO Capital Markets senior economist Carl Campus.

The Japanese yen has been the currency primarily in focus this week.

Japan, the world’s third-largest economy, faces charges that it is trying to lower the value of the yen to stimulate its economy and get a competitive edge over other countries.

The yen fell to a 21-month low against the U.S. dollar this week and a near three-year trough against the euro. As the yen falls, its exports become cheaper and those of other countries, which are also trying to pull out of the economic malaise that followed the 2008 financial collapse, become relatively more expensive.

Earlier this week, the volatility in the currency markets prompted the Group of Seven leading industrial nations, which includes the U.S, Germany, Canada as well as Japan, to warn that volatile movements in exchange rates could adversely hit the global economy and to reaffirm their commitment to market-driven exchange rates.

On Friday, the yen strengthened ahead of the G20 meeting with analysts expecting pressure to be exerted on Japan’s finance minister and central banker to at least commit to not allow the yen to fall much more.

The March crude contract on the New York Mercantile Exchange lost 46 cents to US$96.85 a barrel.

April gold on the Nymex lost $7.40 to US$1,628.10 an ounce while March copper in New York gained a penny to US$3.74 a pound.

Traders were digesting earnings from two of Canada's biggest telecoms.

Telus Corp. (TSX:T) says quarterly net earnings rose almost 23 per cent from a year ago to $291 million, or 89 cents per share. Revenue rose six per cent to $2.85 billion from $2.69 billion.

Rogers Communications Inc. (TSX:RCI.B) exceeded analysts’expectations in the fourth quarter of 2012. Rogers posted quarterly net income of $455 million or 88 cents a share, beating expectations of 72 cents.

Rogers’ revenue was $3.26 billion against expectations of $3.19 billion.

Rogers also announced that president and CEO Nadir Mohamed will retire in January 2014 but will continue to lead the company through 2013.

Enbridge Inc. (TSX:ENB) reports it had $146 million of earnings attributable to shareholders in the fourth quarter, or 18 cents per common share, with nearly $7.2 billion of revenue. On an adjusted basis, the profit amounted to $327 million or 42 cents per common share, two cents below analyst estimates.

Enbridge is also joining up with a partner to convert some of their natural gas capacity to ship crude oil from a pipeline hub in Illinois to refineries in the eastern Gulf Coast refinery market. The Calgary-based pipeline company and Energy Transfer Partners would each own 50 per cent of the joint venture, which they expect to be in service by 2015.

In the U.S., Burger King’s fourth-quarter net income nearly doubled thanks in part to lower expenses and strengthening results in the U.S. and Canada. Burger King earned $48.6 million, or 14 cents per share. That compares with $25 million, or 7 cents per share, a year earlier. Earnings ex-items were 23 cents, eight cents better than expected.

Revenue fell 30 per cent to $404.5 million but this still topped Wall Street’s estimate of $375.3 million.

The strengthening yen hit Japanese stocks as it makes life more difficult for its exporters. The Nikkei 225 stock average fell 1.2 per cent. Hong Kong’s Hang Seng added 0.1 per cent while South Korea’s Kospi rose 0.1 per cent. Mainland China and Taiwan were closed for Lunar New Year holidays.

European stocks were little changed as London's FTSE 100 index rose 0.09 per cent, Frankfurt's DAX slipped 0.18 per cent while the Paris CAC 40 gained 0.19 per cent.

Organizations: University of Michigan, Dow Jones, TSX BMO Capital Markets Group of Seven Enbridge Inc. New York Mercantile Exchange Nymex Burger King Telus Corp. Rogers Communications Inc. Energy Transfer Partners Wall Streets FTSE 100

Geographic location: U.S., TORONTO, Japan Moscow Canada Germany New York Illinois Eastern Gulf Coast China Taiwan London Frankfurt

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