Financials drag TSE 300 lower at midday

Fianancial services are leading the way down this morning, after a stronger than expected retail sales report spooked some investors. The Fed remains the real story however, and no one is expecting a rate hike tomorrow, nor is anyone predicting any independent action from the Bank of Canada. There is just a little fear about the credibility of the supposed soft landing for the U.S. economy. Both the banks and insurers are down.

Gold, pipelines and real estate are joining financials on the downside. Most of the gainers are light, with utilities leading the way, along with some strength in oil service stocks in the wake of a large merger announcement in that area.

The big trader this morning is Clearnet in the wake of its proposed merger with TELUS. The stock is up 42% on 4.6 million shares, chewing up most of the 53% premium on the deal. TELUS is down about 8%, as the acquirer often is in these sorts of deals. Microcell is up 14% on speculation that it will be next.

Other stocks on the downside include Research in Motion, NPS Allelix, C-MAC, QLT and Wi-Lan.

Heritage Concepts continues to trade wildly on speculation. Today it is down 11% on 5.5 million shares. It is joined by William Multi-Tech as a hot penny stock trade, and Yorbeau Resources, another miner turning tech company. Yorbeau is a target after Merrill Lynch crossed a 1 million share block of stock this morning, it is up 18% on 1.13 million shares.

Nortel Networks is flat at midday in active trading. Apart from the utilities there’s some strength in JDS Uniphase, Descartes Systems, 724 Solutions and MDS.

Renaissance Energy Ltd. is in the news after shareholders approved its $3 billion takeover by Husky Oil Ltd.

GSI Lumonics Inc. has announced a deal to sell its life sciences business to Packard BioScience Co for about US$120 million in cash and stock.

In New York, stocks are positive. The Dow is up 40 points to 11,086. The Nasdaq composite has gained 46 points to 3,976, and the S&P 500 is up nine to 1,501.

Although traders are awaiting tomorrow’s Fed move, there is some strength in Intel on analyst comments. Cisco, Boeing and AOL were also leading the way higher in their respective niches. Telecoms are strong, too, after Verizon announced a partial end to its strike and Motorola received permission to build a plant in China worth almost US$2 billion. Oils are also strong.

The CDNX is joining the U.S.-led rally this morning. It is up seven points to 3,560 on average volume of 15 million shares. Mines and oils are weak but techs are strong. R.M.P. Developpement is leading the way, up 30% on 3.3 million shares.