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Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: Kerm Yerman who wrote (8095)	12/21/1997 2:52:00 AM
From: Kerm Yerman	Read Replies (1) \| Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY DECEMBER 19, 1997 (2) FEATURE STORY Dollar dips below US70›. Does Bank of Canada's hold on interest rate hike mean it's ready for weaker C$? By David Thomas - Economics Reporter The Financial Post The C$ tumbled below the psychologically important US70› level Friday, edging closer to its record low after the Bank of Canada opted against raising interest rates to give the ailing currency a boost. The central bank's decision to hold off on another rate hike convinced several analysts it is ready to tolerate a weaker C$. "The bank's line in the sand for the currency at US70› got wiped out, forcing a retreat further up the beach," said Avery Shenfeld, senior economist at CIBC Wood Gundy Securities Inc. The C$ dropped as low as US69.71› during the day but later recovered some ground with the help of aggressive open-market support by the central bank. It closed down US0.24› at US69.88›, close to its record low of US69.13›. It was the first time the C$ had closed below US70› in almost 12 years. "I think a lot of perceptions were changed today," said Michael Gregory, an economist with Lehman Brothers Canada Inc. "The feeling now is that the bank is probably not going to jump in to defend the C$ with more rate hikes." Gregory said he still expected higher rates from the bank. But barring a huge slide in the C$, the moves are unlikely before February and will be to slow economic growth rather than shore up the C$. "Short of the currency falling a couple of cents, I don't see the bank raising rates to defend the C$." John McCallum, chief economist at Royal Bank of Canada, said the prospect of a C$ at under US70› should not be alarming or a sign of crisis. "I don't think we should see the C$ as a sort of national virility symbol. If the real world circumstances change to give us a weaker dollar, that's not the end of the world." The central bank began its course of increasing interest rates in the expectation an overheating economy at the end of next year would lead to inflationary pressures. But the C$'s weakness and a possible global economic slowdown following the downturn in Asian economies have combined to throw the bank a curve ball. The focus has shifted to boosting rates as a currency defence after the C$ came under fire in October. The bank has raised interest rates 100 basis points since the end of September. As for inflation, figures released Friday showed it fell to 0.9% for the 12 months ended September --- its lowest yearly rate in nearly three years. The rate dipped below the bank's inflation target range of 1% to 3%. It is expected to edge up next month but the long-term trend is down from October's 1.5%, say economists. "The low [inflation rate] has boxed in the Bank of Canada," said Sherry Cooper, Nesbitt Burns Inc. economist. "This will make it tough for the bank to justify a further tightening move, thus putting renewed downward pressure on the C$." A chorus of concern is growing that a policy of interest rate hikes to defend the currency will take a hefty toll on economic growth next year and should be abandoned in favor of a weaker currency. CIBC Wood Gundy has forecast another 75 basis points in rate increases are warranted if the bank intends to keep the C$ above US70›. This would knock 1998 gross domestic product growth down from about 3.5% to 2.8%, said Jeff Rubin, its chief economist. Similarly, Merrill Lynch & Co. analyst Karim Basta recently revised his forecast for GDP growth in Canada from 3.5% to 2.8%, based in part on the negative effects of higher rates. Both Rubin and Basta expressed concern the central bank's policy of interest rate increases to defend the currency was damaging since the inflation outlook may actually call for lower rates. "With inflation running below the bank's stated objective and unemployment still stubbornly high, it would be crazy to punish domestic demand," agreed Jeoffrey Hall, a Canadian market analyst with Boston-based Technical Data. INSIDE THE MARKET Patrick Bloomfield Fear an ever increasing factor Sometimes one is lucky enough to get some things right. For instance, I have been suggesting for some months that bonds could give investors a better short-term bang for their buck than stocks. That was indubitably proven in U.S. markets Friday, when the yield on 30-year U.S. treasuries dropped more than one-tenth of a percentage point below the 6% mark, as bond prices jumped and the major stock indexes tumbled. There was more than enough depressing global and domestic news to add some further spookiness to the jitters of a "triple-witching" day, when trading can be influenced by the expiry of stock-related futures and options contracts in Chicago. Quite apart from the mayhem on Asian and other world bourses, market players fretted over South Korea's chances of getting through the next few weeks without default, while the ripples spread from the move by Toshoku Ltd., a major Japanese food company, to seek protection from its creditors. Meanwhile, back on Uncle Sam's ranch, there was a report that individual investors were disinvesting in equity mutual funds, instead of their recent unseemly rush to invest. In addition, corporate earnings concerns were heightened by the 20% second-quarter earnings drop reported by Nike Inc., breaking a long winning streak and reflecting marketing problems in North American and Asia, With inflation a ghoul of the past, the concerns that hit stocks pulled money into the relative safety of bonds, though benefits enjoyed by the Canadian variety have been moderated by the Bank of Canada's need to keep short-term rates up to defend our buck. This columns musings that the bear is now stalking North American stock markets were also lent strength. Sure, my rationale is still based more on mood than numbers. Come Friday, fear was near to replacing the greed of the recent past. And commentators in general were acknowledging that Asian flu has to be a negative for 1998 profit expectations. The second highest trading day on record suggested that the bulls were locking in profits accordingly. But there were also some notable consolations. One was the rugged way the major U.S. market indexes clawed their back from there morning fall. Clearly, bargain hunters were also in evidence. Then there was the relative strength of some tech stocks and small caps. Though the Nasdaq composite index took its knocks like the rest, it still held above 1500, and then came back at the end of the day. Semiconductors and Internet-related stocks were pockets of strength. Keeping in mind that tech stocks are still purported to be the wave of the future, and that their ranks now include some of North American markets' worst walking wounded cases, they obviously bargain hunting targets. IBM Corp., for instance, does not look particularly overpriced at a trailing price earning multiple of 17. On the other hand, the investment case might be a little harder to prove for the mighty Microsoft Corp., especially after Judge Thomas Penfield Jackson had a technician show him how to perform the simple task of disabling the company's Internet browser. (The software giant had been acting as if this could only be accomplished at the cost of disabling its whole Windows 95 operating system.) Why are our Canadian markets being hit harder? One has only to note the symptoms of Asian disinflationary flu in gold and precious metals prices to answer that one. In addition, our valiant central bank's defense of the C$ is beginning to lift three-month treasury bill rates to a level where they can be an acceptable alternative to income generating stocks. But bargains are also showing up here, too. The trick in the months ahead will be to find and buy them. MARKET EYE Of bulls, bears and tigers William Hanley We hate to leave you like this, but the entire Market Eye team is headed south on its annual Caribbean Mission of Mercy - Batteries Not Included. So this will be it for 1997, which will long be remembered as the year that came after 1996. But we can't leave you without some random thoughts - stocking stuffers for the mind - about where the various markets are and where they might be going as we head into the new year. Incidentally and ironically, 1998 is the year of the tiger - Asian economies take note - in the Chinese calendar.First, the Western won. The US70› level is a crucial psychological level for the C$. It sank below that on Friday as the Bank of Canada, which is alternately wringing its hands and sitting on them as the loonie heads south, failed to act. Seventy cents is a politically and socially charged barrier. Though the bank will hate to play Grinch, interest rates will have to be raised next week and maybe again the week after or very early in the new year to let the markets know a line has been drawn in the sand. If the C$ is not buttressed now, hello US68›, bye-bye bond market, and next stop US66›. If it ever came to US66›, though, there would likely be widespread buying of Canadian assets at firesale prices, which in turn would probably boost the C$. If we were not living side by side with the U.S., this US70› taboo would not be as strong. But when Canadians are confronted daily by the "number" like a running sports score, they take it very personally and emotionally.Which brings us to the domestic stock market, which investors are beginning to take very personally with seven more trading days left in the year. We hate to bleat and run, but it is now conceivable that the benchmark Toronto Stock Exchange 300 composite index could end up returning little more this year than what those poor souls are earning in - dare we say it? - GICs and term deposits. The TSE 300 is now below its 200-day moving average, which may be telling us technically that the bear market has arrived, if only in baby form. On the other hand, it may be telling us a buying opportunity is at hand. A Reuters survey of Bay Street analysts conducted Dec. 12 found that on average they were expecting a TSE 300 return of 17% in 1998. Forgetting for a moment that analysts are paid to be as bullish as they can possibly be, in that they are supposed to look for things to buy, not sell, Canadian stocks may start to look cheap very soon. We must confess, however, that we have a hard time accepting that there are any compelling fundamental reasons that our resource stocks should suddenly come to life. Who is going to be buying the underlying commodities?The bear is stalking Wall Street, where bonds are looking the best bet for 1998, with some observers calling for a 5% yield on the 30-year treasury from around 5.9% now. As of Friday, the benchmark Standard & Poor's 500 index was still up 27.8% on the year, with the Dow blue chips ahead 20.2% and the Nasdaq composite 18.1%. But the Dow still has not recaptured the heights of early August and the S&P is below the record of early October. Meanwhile, Nasdaq and its tech stocks clearly have relinquished the role of market leader and are in a bear market of their own. All this, largely the result of the Asian crisis, does not bode well for U.S. stocks and, by extension, Canadian equities. But remember, we went into the past two years not expecting to anywhere near match 1995's 35% S&P gain. After advances of 21% in 1996 and about 27% so far this year, few people have great expectations for 1998. Yet that, in the contrarian order of things, is something to keep in mind in this season of hope. We'll be back in this space Tuesday, Jan. 6, when the view from the Street will have no doubt have changed again. BUY - HOLD - SELL AGF Management's Buy & Sell North American franchise strength to the rescue Sonita Horvitch - The Financial Post Laura Wallace, vice-president and portfolio manager at Toronto-based AGF Management Ltd., is focusing on Canadian companies with a strong North American franchise. Despite the uncertainty in Asia, the North American economy will continue to grow in 1998 albeit at a slower pace than in 1997. Wallace is the lead manager of AGF Canadian Equity Fund, a conservative growth fund with an emphasis on large capitalization stocks. She warned investors to expect sharp moves in both directions in the main North American stock indexes next year. "The events in Southeast Asia will continue to affect the North American capital markets, at least for the first half of 1998," she said. The expected slowdown in Asian economies will reduce world and North American economic growth rates. Therefore 1998 North American profits will come under pressure. "These may be below the investment community's expectations." At current valuations, North American equities are sensitive to disappointments. On a positive note, the southeast Asian slowdown will help to lessen inflationary pressures in North America, allaying fears that the U.S. Federal Reserve would have to raise interest rates in the light of the continuing strength seen in the U.S. economy. Another plus, from a flow of funds standpoint, is that international investors are likely to view North America as a safe haven. Canada's challenge will be to work its way through its currency weakness. One problem is that Canada is viewed as an exporter of resources, where prices are under pressure. "There is little acknowledgment of the growing significance of non-resource exports such asautos, auto parts and high technology," said Wallace. In choosing companies with a strong North American franchise, Wallace is highlighting those active in retailing and communications, given the increase in consumer spending. She has added to her holdings in Sears Canada Inc. (SCC/TSE), which closed recently at $19.75 and has a 52-week trading range of $25.75 to $9.90. The stock was her pick in this column, May 6, at $14.90. In the communications sector, her pick is Toronto-based Baton Broadcasting Inc. (BNB/TSE) $24.50 ($25-$6.90). The television broadcasting company's earnings should be strong in 1998 and 1999, she said. The company is under new management and advertising revenue should be strong, said Wallace. The money manager is also favoring the print media sector. Wallace has increased her holdings in the financial services sector. Her two favorites are Montreal-based Royal Bank of Canada (RY/TSE) $76.05 ($82.50-$46) and Toronto-based Toronto-Dominion Bank (TD/TSE) $53.95 ($55.25-$33.50). Wallace said both banks should show strong growth relative to their peers. Despite recent upsets in the equity market, she expects the fee-related business of the pair to remain strong. Large Canadian high-tech companies have been the subject of downward earnings revisions. "But many of the mid-cap companies with a strong North American focus continue to offer good earnings visibility," said Wallace, who picked three favorites: Markham, Ont.-based Geac Computer Corp. Ltd. (GAC/TSE) $46.75 ($48-$12.55), which sells, services and rents medium to large scale computer systems, Toronto based Leitch Technology Corp. (LTV/TSE) $40.75 ($45-$24), which makes and markets electronic equipment used by television broadcast facilities and Thornhill, Ont.-based ATI Technologies Inc. (ATY/TSE) $32.20 ($32.25-$15.65), which makes and markets personal computer graphics and multimedia products. Wallace has reduced her exposure to metals and minerals. "This sector is the most vulnerable to the slowdown in growth in Southeast Asia." These countries will sharply curtail infrastructure development in 1998. Wallace has sold holdings of nickel producer Inco Ltd. (N/TSE) $25.50 ($51.45-$24.25) and aluminum producer Alcan Aluminium Ltd. (AL/TSE) $39 ($55.70-$37.10). Volatility marks Canada's high-tech industries Canadian press It's been a manic year for Canada's high-tech industries. Wild swings between elation and depression were commonplace as the rapidly changing information economy anointed some with riches while saddling others with debt. It's an industry that has grown to become larger than fishing, forestry, agriculture and transportation combined. But it became notorious this year for its volatility and extreme shortage of skilled workers. Gaylen Duncan, chief executive of the Information Technology Association of Canada, focuses on the rosey side of 1997. "It was the year that high-tech emerged as the engine of growth for the economy," he says, ready with charts and graphs to prove it. Indeed, the numbers are impressive. But the best way to see what's going on is to have a look at companies like Northern Telecom and Newbridge Networks. In June, Nortel said it would spend $250 million over four years expanding its Ottawa operations and hiring 5,000 "knowledge workers" to meet demand for its telecommunications gear. Nortel, based in Brampton, Ont., then announced plans to hire another 1,000 in Montreal. More than 1,000 jobs have been created at Nortel's Calgary plant in the last three years. The company, which employs 70,000 worldwide, had revenues of $12.8 billion US last year and is Canada's biggest exporter of technology products. Meanwhile, Newbridge Networks Corp., based in Kanata, Ont., said it needed another 4,000 new workers over four years to satisfy international hunger for its data network equipment. Duncan says high-tech growth has been so rapid in the Ottawa area that it has more than offset the massive job cuts that have diminished the ranks of the federal government the last three years. The booming demand for high-tech products is being fuelled by worldwide deregulation of the telecommunications industry and the so-called convergence of computers and other technologies. But companies like Newbridge and Nortel have loudly lamented the fact that they can't find enough qualified applicants for all those new jobs. In fact, the so-called skills gap in Canada amounts to about 30,000 unfilled positions, says Dan Potter, chief executive of the Information Technology Institute, based in Halifax. "It's an acute problem," says Potter, whose private schools train university grads to work in the information trade. The growth of Potter's business proves the point. In 1995, he had one school in Halifax earning $2.5 million a year. The institute doubled its revenues in 1996, then tripled them to $15.7 million this year with four schools in Halifax, Moncton, N.B., Ottawa and Toronto. Potter's students may be scrambling to keep up with job offers, but they'll have to choose wisely. The path to high-tech pot of gold was left littered this year with plenty of corpses and walking wounded. Ottawa's Corel Corp., once the darling of Canada's software industry, was pummelled by a barrage of bad news. Poor sales of its well-known WordPerfect software drove the firm into the red for three consecutive quarters. The company recently announced it expects to lose $95 million US in its fourth quarter alone, about $230 million US over the last nine months. Its stock plunged from a 52-week high of $10.95 to a new low of $2.54. Indeed, technology stocks in general - even Nortel and Newbridge - showed a stunningly elastic nature this year. "They were all over the map," said Patricia Croft, portfolio manager at Sceptre Investment Counsel in Toronto. "They were a market leader at one point, but fell back as we began to come to grips with overproduction and supply. They were a Cinderella that turned sour." Cheryl Nesbitt, analyst at Scotia Captial Markets in Toronto, agreed. "There was huge volatility, right from the beginning." Duncan of the Information Technology Association has a simple explanation. "We're an emerging industry, and we're highly volatile because of the rate of change. What looks like a hot product on Monday sometimes ... doesn't even exist by Wednesday." Several firms learned that lesson the hard way in 1997. -In October, Ottawa software developer Fulcrum Technologies Inc. slashed 80 jobs and warned that it would lose $8 million in its third quarter after sales went into a tailspin. -The assets of insolvent Gandalf Technologies Inc. of Kanata, Ont., were liquidated this year after the computer networking company finally succumbed to years of mounting losses. Unsecured creditors were owed $10 million US. -Istar Internet Inc. of Ottawa was sold for $35 million to American Internet provider PSInet Inc. On its first day of trading in November 1995, Istar stock shot to $17.75, up 48 per cent - one of the biggest one-day climbs in the history of the Toronto stock market. After the PSInet bid was announced, its shares hovered just above $1.

To: Kerm Yerman who wrote (8095)	12/23/1997 10:10:00 AM
From: Kerm Yerman	Read Replies (2) \| Respond to of 15196

MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY DECEMBER 22, 1997 (1) Tuesday, December 23, 1997 Stock Markets Bay Street Bounces Back Bay Street ended a nine-day losing streak in a search for stability and quality. U.S. blue chips rose as investors snapped up defensive names. The Toronto Stock Exchange 300 composite index rose 60.19 points, or 0.9%, to 6595.53. Volume on the TSE was 85.1 million shares, well down from 123.8 million shares traded on Friday. BCE Inc. and Royal Bank of Canada led the charge, as investors sought companies with stable earnings growth and high dividend yields. "We're having a nice rebound after the market's recent weakness," said Andre Chabot, a portfolio manager at Montreal-based Magna Vista Capital Management Inc. "There's a flight to stability and quality." BCE (BCE/TSE), the most heavily weighted stock in the 300 index, jumped $2.70 to $47.95 after U.S. weekly Barron's said Geoff Tirman of Little Rock, Ark.-based Talisman Capital found the stock to be "woefully undervalued." Royal Bank (RY/TSE) rose $2.25 to $77.20. The bank has signed an agreement to make its credit card-processing systems compatible with year 2000 technology. Bank and utility stocks, which account for 34% of the TSE 300, rebounded after lagging last week. "Those companies have good earnings, high dividends and price-earnings ratios that are not outlandish," Chabot said. "Banks are one of the sectors where you're pretty sure next year's earnings will be higher. It's a safe and solid sector." Bank of Nova Scotia (BNS/TSE) rose 55› to $65.20 and Bank of Montreal (BMO/TSE) climbed 40› to $62.30. TransAlta Corp. (TA/TSE) rose 55› to $21.95 and Fonorola Inc. (FON/TSE) rallied $1.85 to $30.25. Northern Telecom Ltd. (NTL/TSE), 51.7%-owned by BCE, rose $2.25 to $125 and Newbridge Networks Corp. (NNC/TSE) rose 50› to $51.50. Bellwether issues, which are expected to garner steady profits next year, aided the market's advance. Companies like Canadian Pacific Ltd. and Potash Corp. of Saskatchewan Ltd. bounced back after being sideswiped last week over concern about an economic slowdown arising from the turmoil in Asia. CP shares (CP/TSE) rose 90› to $37 and Potash (POT/TSE) jumped $1.95 to $117. Higher gold prices boosted shares of gold producers. The price of bullion rose US$1.60 to US$291.10 an ounce on the Comex division of the New York Mercantile Exchange. Barrick Gold Corp. (ABX/TSE) rose 50› to $25.95 and Euro-Nevada Mining Corp. (EN/TSE) jumped $1.60 to $19.50. Other major Canadian markets closed mixed. The Montreal Exchange portfolio rose 53.19 points, or 1.6%, to 3352.9. The Vancouver Stock Exchange index fell 2.09 points, or 0.4%, to 593.99. HOT STOCKS MDC Communications Corp. (MDZa/TSE) closed at $8.75 yesterday, up 25›. The shares have a 52-week range of $7.60 to $14. Toronto-based MDC continued its buying spree yesterday with its friendly bid for the direct to consumer cheque operations of U.S.-based Artistic Greetings Inc. The US$33-million deal will make MDC Communications one of the largest direct cheque printing companies in the U.S. When combined with its other units in Maryland and Arkansas, the businesses are expected to generate $112 million in revenue next year. There is no equivalent to the direct cheque business in Canada, where customers order cheques through their banks. Americans also write more cheques than Canadians - 22 a month, compared with 7.5. The US $33-million bid, valued at US$5.70 a share, is a 28% premium to Artistic Greetings' closing price of US$47/16 on Friday, MDC said. The stock (ARTG/NASDAQ) rose 1/16 yesterday to close at US$5 1/8. Montreal's Axcan Pharma Inc. (AXP/MSE) closed down $0.40 to $14.10. The company is selling its Biopharm Laboratories subsidiary for $2 million, to focus on developing gastrointestinal drugs. The buyers are St-Laurent, Que.-based Warnex Pharma Inc. and some members of Biopharm's management. A small part of the purchase price, to be paid upon closing in April, will consist of Warner shares. In connection with the deal, which has yet to receive regulatory approval, Warner will raise up to $2 million through a private placement of up to 13.3 million shares at 15› each. "This transaction will allow Axcan to focus on its core business: the development and marketing of gastrointestinal drug products," said chief executive Leon Gosselin. Earlier this month, the company won approval from the U.S. Food & Drug Administration for its liver treatment, becoming the fourth publicly traded Canadian drug company to win an FDA approval, after BioChem Pharma Inc., Biovail Corp. International, and QLT Phototherapeutics Inc. Draxis Health Inc. (DAX/TSE) closed unchanged at $4.50. Veterinary pharmaceutical giant Pfizer Inc. has paid Toronto's Draxis Health Inc.$21 million, its first instalment in a $57-million deal to license Anipryl, a drug Draxis developed for dogs. Under the terms of the deal announced last month, Draxis will manufacture the prescription drug, which has been approved to treat canine Cushing's disease, and Pfizer will market it worldwide. Pfizer will also pay Draxis $14 million if the U.S. Food & Drug Administration approves the drug for use in treating canine cognitive dysfunction, a claim that was submitted in August. Draxis is entitled to payments of up to $22 million, pegged to winning further regulatory approvals in other countries. It will also receive a royalty on the sale of the drug. Richtree Inc., operator of the popular March‚ and Movenpick restaurants in Canada, says New Yorkers are ready for its brand of "food as entertainment." "Yes, it's a bold move," says Richtree chief financial officer Colin West of the company's recent decision to open a 900-seat March‚ restaurant in the World Trade Center by autumn 1998. Richtree runs 13 restaurants in the Toronto area and one in Ottawa. West said the World Trade Center is just the beachhead for a U.S. expansion. "The potential rewards of going to the States are much, much better than staying in Canada." says Richtree's president, chief executive and 51% owner, Jorg Reichert. Richtree recently released results for its first seven months as a public company. In the period ended July 27, it lost $2.3 million (26› a share) on revenue of $28.4 million. The loss included a $1.95 million writedown on its Palavrion restaurant in the CBC Broadcast Centre in Toronto. For the first quarter of fiscal 1998, ending July 31, Richtree had sales of $13.7 million and net income of $112,000. For the March‚ division, sales were $8.2 million, with a net income of $542,000 and earnings before interest, taxes, depreciation and amortization of $1 million, representing 12.4% of sales. Richtree was called Movenpick Canada until Jorg Reichert and his wife Marianne bought out the Swiss parent in 1996. They took the company public in February to finance U.S. expansion. The initial public offering consisted of 1.3 million shares sold at $6 a share, for gross proceeds of $7.8 million and net proceeds of $6.8 million. The IPO followed a private placement of 3.8 million special warrants sold in November 1996 at $5.50 each, which raised $21 million. Since the IPO, Richtree shares (MOOa/TSE) have ranged from a low of $4 on March 31 to a high of $6.50 on Oct. 10. Loewen, Ondaatje, McCutcheon Ltd. analyst Himalaya Jain says there is no reason why the March‚ concept shouldn't take off as long as the company chooses its locations well. He points out, based on current sales volumes and high landlord interest, "there is tremendous potential" for the concept. In fact, he is concerned Richtree is behind schedule in rolling out its aggressive plan. "With a proven product and ready market, one should not hesitate in moving fast," he says in a recent report. With a $10 target for the stock over the next 18 months, Jain says Richtree shares won't likely move much until the Montreal and U.S. sites are open. "Investors are waiting for Richtree to open these sites and get them running profitably before the price starts to move." He estimates earnings of 17› for the fiscal year 1998 and 48› the following year. Montreal based Polymer Group Inc. (PGH/NYSE) closed yesterday at US$9 7/16, off 5/16 The company said yesterday it will sell Dominion Textile Inc.'s mainstay denim business and workwear division toNorth Carolina's Galey & Lord Inc. for US$480 million. Polymer and affiliates, now completing a $597.2-million takeover of Domtex, confirmed the sale price in a release that also revealed Galey & Lord has lent US$141 million to Polymer as part of the agreement. Polymer said Galey & Lord will begin operating Domtex "effective immediately." It was not known what changes are planned. Eden Roc Mineral Corp. (EDN/TSE) closed yesterday at $0.20, a new 52-week low and down 20› from Friday. They have traded as high as $2.34 in the past year. Eden Roc, a small Toronto-based gold producer, is having trouble meeting debt obligations, the company said yesterday. It will also close its only producing mine, the Junction, in the Ivory Coast, by the end of this month. The mine has fallen victim to low gold prices and depleted reserves. he mining junior is in talks with a major lender, Rothschild Australia Ltd., on its ability to repay money borrowed under a US$5-million revolving credit facility. "Eden Roc is also in breach of certain covenants under its loan agreement with Rothschild Australia Ltd.," the company said. Angoss Software Corp. (ANC/ASE) lost $0.01 yesterday to close at $0.24 and SLM Software Inc. (ESP/TSE) slipped 20› to close at $12. The board of Angoss said in a circular mailed to shareholders yesterday that an amended takeover bid by SLM Software Inc. is at the low end of the range but "adequate" for those who wish to tender their stock. The tiny Toronto-based software firm said in the next breath that it has been told investors holding 37% of its common stock deem the 25›-a-share offer too low and don't intend to turn over their shares. The Angoss directors said the company is at a "watershed" in its development. With a key lawsuit out of the way, the firm has been approached with a financing proposal and can stay afloat without SLM. Angoss invited SLM to raise its offer to reflect the recent legal victory that wiped a $4.5-million liability from its balance sheet. SLM declined. The $9-million offer, which was extended after only 40% of Angoss shares were tendered by the Dec. 12 deadline, expires Dec. 29. BCE Inc. (BCE/TSE), up $2.70 to $47.95, on volume of 1.5 million shares. In its popular Up & Down Wall Street feature, Barron's Dec. 22 edition reported that fund manager Geoff Tirman, of Little Rock, Ark.-based Talisman Capital, believes BCE is worth close to US$10 a share more than its current market price. Tirman was quoted as saying BCE's Bell Canada unit is trading for a third to a quarter of the price of U.S. telephone companies per access line. He is enthusiastic because he expects newly appointed BCE president Jean Monty to turn the company around. Talisman Energy Inc. (TLM/TSE), up 30› to $42.50, on volume of 113,944 shares. The company said it had signed a production sharing contract covering the Madura offshore block in Indonesia. The contract "is on trend with a number of significant oil and gas discoveries and we are excited about the potential," said president Jim Buckee. The 4,246 square kilometre area is southeast of Madura Island in the East Java Sea. Talisman has a 100% working interest. More on this subject in the oil & gas section. Mansfield Minerals Inc. (MDR/VSE), up 62› to $1.87, on volume of 290,145 shares. Halted since Thursday, Mansfield said its lawyers have received a judgment in the Cerra Samenta title dispute from the Court of Appeal in Salta province, Argentina, and the company had "won on each and every point of all litigated issues." Cameco Corp. (CCO/TSE), up $3 to $45, on volume of 117,461 shares. The company is bouncing off prices as low as $40 six trading days ago after bad news about Russian nuclear exports melted down the stock price. NEW YORK COMMENTARY With the holidays rapidly approaching, Wall Street appears in a joyous mood heading into the last full trading day of the week, if not the year itself. Given the U.S. market's ability to shake off another tumultuous day in Asia on Monday, the expectation is for further gains in Tuesday's trading session. Aiding that effort will be the fact that trading is suspended in Japan in observance of the Emperor's birthday. And trading volume here in the States is expected to continue to dwindle as traders prepare for Thursday's Christmas break, which is sandwiched between two shortened sessions on Wednesday and Friday. Those issues aside, many market players are beginning to get the feeling that Friday's big turnaround marked a reversal that will likely carry stocks farther in the coming weeks. "I think the market has a shot of taking out new highs in the first weeks of January," said Michael Driscoll, block trader at Hambrecht & Quist. Noting the positive influence of the low-interest-rate environment and buying in anticipation of the "January effect" -- when stocks sold for tax-loss reasons often bounce -- the trader sees smooth sailing ahead, at least for the next five or six weeks. "I don't see any real problems until we start getting fourth-quarter earnings at the end of January," he said. Ironically, while many market players believe the unrest in international markets, particularly in Asia, will keep U.S. equities off-balance, Driscoll says their weakness could be to Americans' benefit. "For the time being, the market still looks OK despite what's going on overseas," the trader said. "U.S. stocks are seen as a 'safe haven' in the global equity landscape." That being said, there's still a feeling of unease -- and impending trouble (if not doom) -- among some market sages. "My worries are intensifying," said Hugh Johnson, chief U.S. market strategist at First Albany. "There are many messages coming from the market. One is, the economy is going to slow next year, perhaps more than anyone expects." Judging by the flattening of the yield curve -- or the spread between long dated Treasury bonds and those with shorter maturation dates -- Johnson says there's a 20% chance the U.S. economy will fall into recession sometime in 1998. He added, however, "the odds favor (that) we're heading toward an economy that grows slowly, but one that nevertheless grows." The strategist took exception to a Wall Street Journal article on Monday arguing that the flattening of the yield curve may not be a harbinger of slowing economic activity, as has historically been its message. The article postulates that the flattening is "different" this time because it's due more to a rally in the long end of the market, rather than a more traditional short-term retreat in price due to a Fed tightening, or expectation thereof. Bond yields move in the opposite direction of their price -- thus, when bonds are "rallying," their yields fall. Johnson called the article's thesis "off-base," noting that yields in the short end of the curve have risen in a "meaningful" way in conjunction with the fall in long-term rates. And regardless of what has prompted the move, the strategist believes a flatter yield curve portends slowing economic growth. "If short-term rates go up, borrowing costs go up, regardless of whether the Fed raises rates or not. It can occur and constitute a de facto tightening, leading to a slowdown of bank lending and money growth," he said. "The flattening of the yield curve is just as meaningful today as it ever was. If somebody took a little time to check financial market history, they would see that often money conditions tighten without any central bank raising interest rates." So what does all this mean for the average equity investor? If you believe Johnson -- and historical trends -- then the action in the bond market suggests that economic activity in the U.S. is indeed going to slow. And that, of course, will have a dampening impact on corporate earnings, which brings us back to Johnson's point of concern -- that the stock market is becoming more "defensive." Playing Monday-morning quarterback, the First Albany strategist suggested the stock market has been warning about such a slowdown since August, when there was a shift out of technology and small-cap stocks, and into utilities and other defensive sectors. "That reflects the fact (that) the real pressure from Asia was becoming more apparent to the quicker-witted (players)," he said. "The rest of us figured out this would be a serious problem when Hong Kong broke." Far from completely gloomy about the market's prospects, Johnson said the first half of 1998 could be an exercise in volatility as corporations and traders get a better handle on just how serious are the Asia issues. By mid-year, he contends, "we'll know how bad this thing is," and if there are no nasty surprises hidden in the books of Japan Inc., "we'll start to see the other side of the rainbow and stocks will recover." For the time being, however, "the stock market is acting defensive and is begging investors to play it" as such, Johnson said. After The Bell Chip-equipment maker FSI International (FSII) posted first quarter earnings of 8 cents per share, 3 cents below the consensus estimate. Kofax Image Products (KOFX) said its second-quarter earnings may fall slightly shy of the 14 cents per share analysts were expecting. E*TRADE Group (EGRP) says it plans to buy back up to 2 million shares of its common stock. Merix (MERX) reported second-quarter operating income of 9 cents per share, 2 cents above expectations. Stepan (SCL) and Universal Stainless Alloy Products (USAP) separately warned that fourth quarter earnings will not meet expectations. WD-40 Co. (WDFC) posted first-quarter earnings of 34 cents per share, 2 cents better than expectations. Weider Nutrition International (WNI) reported second quarter earnings of 10 cents per share, 3 cents shy of expectations. Catalina Lighting (LTG) said its first-quarter sales will fall below results posted a year ago. Monday's Markets On Monday, technology returned to its leadership role -- for one day, at least -- by helping the Dow gain 63 points while the Nasdaq rose more than 7. Ironically, the performance of tech stocks helped U.S. equities overcome some further weakness in Asia's major markets. Some argued that it was a technical bounce, but tech stocks were led by PC makers and Internet-related stocks. Only ongoing weakness in Microsoft (MSFT) limited the sector's gains. The Dow Jones Industrial Average ($INDUA) shot higher at the opening bell, shaking off weakness in Asia's major markets to climb more than 85 points in the early going. The index reversed course thereafter, however, and fell into negative territory shortly after noon EST. But the blue chips didn't stay down for long; another rally attempt proved short-lived, but after about 1:15 p.m. the index began to march higher. The Dow continued to climb into the last minutes of trading and finished with a gain of 63.03 points at 7,819.32. The tech-rich Nasdaq Composite Index (COMP) also raced ahead in the early going, then saw gains of nearly 20 points fade quickly as the morning unfolded. But the index dipped into negative territory only for a very brief stint and climbed through much of the afternoon. The Nasdaq gained 7.30 points to 1532.04. The S&P 500 (SPX) closed up 6.93 points to 953.71 while the Russell 2000 Index (RUT) gained 2.85 points to 422.88. Volume was light on the NYSE, a sharp contrast after Friday's session set a new level for the second-heaviest trading day in Big Board history. With many traders absent due to the coming holidays, 545 million shares were traded while advancing issues bested decliners by a 4-to-3 margin. In Nasdaq activity, 673 million shares were exchanged, and advancers trailed decliners by a 5-to-6 spread. Technology Stocks Save for Microsoft (MSFT), whose shares fell 1 5/8 to 127 1/16, most of technology's bellwether names rose on the session. The software giant continues to be dogged by worries about its battle with the Justice Department, which have helped shave some $20 off the price of its stock since Dec. 8. Among the biggest gainers in the sector were Dell Computer (DELL), up 3 5/16 to 81 5/8; Intel (INTC), which gained 1 7/16 to 71 7/16; Sun Microsystems (SUNW), which jumped 1 1/8 to 39 13/16; and PeopleSoft (PSFT), which closed up 1 1/2 to 34 3/8. Cisco Systems (CSCO) climbed 1 3/16 to 54 5/8 after the networking giant announced its acquisition of LightSpeed International, a developer of voice-signaling technology, for $160 million in stock. Other networking stocks turned sour on the deal: Ascend Communications (ASND) was particularly hard hit, falling 1 11/16 to 25 5/8. The Dow's technology components were cooperative to the rise. IBM (IBM) rose 7/16 to 102 9/16 and Hewlett-Packard (HWP) jumped 2 9/64 to 63 5/16. Elsewhere on the NYSE, Compaq Computer (CPQ) rose 1 1/8 to 54 5/8, Computer Associates (CA) gained 1 5/8 to 51 5/8, and America Online (AOL) shot up 5 1/8 to 89 7/8. In Nasdaq activity, other Internet-related stocks followed AOL's cue. Yahoo (YHOO) jumped 2 9/16 to 64 7/16, Excite (XCIT) rose 1 1/32 to 26, Lycos (LCOS) climbed 1 3/8 to 38 1/8, and Amazon.com (AMZN) closed up 2 3/8 to 56 3/8. The semiconductor and chip-equipment makers mainly continued to rise in their attempt to come back from their recent shellacking. KLA Tencor (KLAC) jumped 2 1/16 to 39 7/8, Lattice Semiconductor (LSCC) rose 1 5/8 to 54 1/4, VLSI Technology (VLSI) closed up 1 1/16 to 20 5/8, ASM Lithography (AMSLF) rose 1 1/2 to 65 1/2, and Asyst Technologies (ASYT) rose 1 11/16 to 23 1/16. Micron Technology (MU), however, fell 15/16 to 26 1/4 despite being upgraded by Brown Brothers to "hold" from "avoid." Cabletron (CS) rose 5/16 to 14 3/16 after the firm posted third quarter earnings of 13 cents per share, one penny ahead of analyst expectations but far below the 44 cents it earned a year ago. The company had warned that results would be affected by disappointing sales in North America. The "disaster du jour" in technology Monday was Xionics Document Technologies (XION), which fell 6 9/32 to 3 19/32 thanks to poor earnings results. The company posted second quarter earnings of 2 cents per share, missing Wall Street's expectations by 8 cents. The company partly attributed the shortfall to weakness in Asia. Digital Link (DLNK) fell 6 9/32 to 3 19/32 after warning later Friday that it will lose as much as 7 cents per share in the fourth quarter. Analysts were expecting the manufacturer of high-speed digital-access products to earn 20 cents per share in the quarter. SBC Warburg Dillon Read cut its rating on the stock to "neutral" from "outperform." In sympathy, Peerless Systems (PRLS) shed 1 13/16 to 12 1/16 following a downgrade from Adam Harkness to "market perform" from "attractive," citing Digital Link's warning. Software maker Broderbund (BROD) fell 1 7/16 to 26 13/16 after CIBC Oppenheimer downgraded the company from "hold" to "underperform." Electric Lightwave (ELIX) climbed 1 1/8 to 14 5/8 thanks to a new "buy" rating from Lehman Brothers. Datum (DATM) benefited from an upgrade by Rodman & Renshaw to "buy" from "neutral," rising 2 7/16 to 16 3/16. Telecom equipment provider Dynatech (DYT) soared 10 3/16 to 46 15/16 thanks to management's $49-per-share buyout. Active Issues Dow advancers were led by Merck (MRK), which rose 3 1/4 to 105 7/8 following the FDA's approval of its hair-loss treatment, Procipia. Other gainers included: AT&T (T), up 2 5/8 to another new 52-week high of 63 15/16; Walt Disney (DIS), which jumped 1 9/16 to 97 3/8; and General Motors (GM), which rose 1 5/16 to 59 7/8. The blue-chip index was held back by the likes of The Travelers Group (TRV), which fell 1 to 52, while Union Carbide (UK) slid 9/16 to 42 3/8, and Wal-Mart (WMT) dipped 1/2 to 38 1/8. The upcoming holiday did nothing (apparently) to deter corporations from their typical mania for mergers on Mondays. American Electric Power (AEP) fell 1 1/4 to 50 3/4 after agreeing to acquire Central and South West (CSR) in a deal valued at about $28.1 billion, including the assumption of debt. Central and South West shares gained 1 1/8 to 27 1/8. Global insurance colossus American International Group (AIG) gained 1 1/2 to 106 3/8 following its announced intention to acquire American Bankers Insurance Group (ABI) for $2.2 billion. American Bankers gained 1 7/16 to 45 11/16. Tyco (TYC) shares rose 1 15/16 to 42 7/8 on its announcement to acquire American Home Products (AHP) for $1.77 billion in cash. AHP shares climbed 3/4 to 74 7/8. Gold miner Homestake Mining (HM) fell 9/16 to 9 3/8 on news that it was acquiring Australian Plutonic Mining in a $640 million stock deal. In de-merger news, Pacific Scientific (PSX) shares climbed 1 3/4 to 23 7/16 after the manufacturer of electrical equipment and safety devices rejected a $20.50 buyout offer from Kollmorgen Corp. (KOL). Kollmorgen shares rose 3/8 to 17 3/4. In "it ain't over 'til it's over" merger news, shares of Lukens (LUC) jumped 4 1/2 to 28 1/2 after receiving an unsolicited $28-per-share buyout offer from Allegheny Teledyne (ALT). The offer comes less than a week after Bethlehem Steel (BS) made a $25-per-share bid for Lukens. Allegheny Teledyne closed up 1 3/8 to 25 5/16 while Bethlehem Steel rose 5/8 to 8 7/16. Skywest (SKYW) shares soared 1 15/16 to 27 3/4 after the commercial carrier said its third-quarter earnings will far exceed the 13 cents analysts were expecting. Big carriers, however, suffered a tough session. Delta Air Lines (DAL) fell 3 5/16 to 113 1/2, US Airways (U) dipped 2 1/4 to 56 7/8, UAL Corp. (UAL) slid 1 9/16 to 88, and AMR Corp. (AMR) dropped 1 1/4 to 123 5/8. A preview of better-than-expected earnings helped spur shares of Capital One Financial (COF) up 1 13/16 to 50 1/4. The financial services firm said its fourth-quarter and full-year results will likely beat analysts' estimates. Big bank stocks were mainly weak, however, as Citicorp (CCI) fell 1 to 127 3/16, Chase Manhattan Bank (CMB) slid 1 5/16 to 106 13/16, and Wells Fargo (WFC) closed off 2 1/4 to 332 3/4. Coinmach Laundry (WDRY) climbed 2 5/8 to 24 3/4 following its receipt of a new "strong buy" rating from BT Alex. Brown. Guidant (GDT) jumped 4 1/2 to 58 5/8 thanks to an upgrade from Vector Securities to "attractive" from "neutral." Drug industry leaders were also higher: Warner-Lambert (WLA) gained 2 7/16 to 122 1/2 and Pfizer (PFE) rose 1 9/16 to 74 5/16 to lead the pack. Even Pharmacia & Upjohn (PNU), whose Rogaine drug could be threatened by Merck's FDA news, closed up 5/8 to 36 5/8. KN Energy (KNE) rose 2 to 49 5/8 thanks to an upgrade from Rauscher Pierce Refsnes to "buy-market outperform" from "market perform." Libbey (LBY) shed 3 11/16 to 37 1/8 after Salomon Smith Barney downgraded the housewares firm to "neutral" from "outperform."