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To: Bobby Yellin who wrote (11835)	5/17/1998 8:59:00 PM
From: goldsnow	Respond to of 116822

Bay Street Beat: Canadian markets to stay choppy 11:53 a.m. May 17, 1998 Eastern By Sarah Edmonds TORONTO (Reuters) - Bears are beginning to prowl Canadian equity markets again, woken from hibernation by the thunk of falling commodity prices and renewed Asian worries. The Toronto Stock Exchange, the largest exchange in Canada, rose 6.17 points on the day to close at 7,684.02 Friday, but finished down 15.22 points on the week. Weak base metal and energy prices weighed on the market in the week. The Canadian dollar, pummeled after the Bank of Canada indicated Wednesday that it would not be raising rates anytime soon, helped to sour the mood as well. But precious metals enjoyed a renaissance as investors speculated that the upheaval in Indonesia may curtail production at some of the country's many gold mines. Gold shares were active and higher on Toronto and the precious metals index closed Friday up 103.63 points, or 1.45 percent, at 7241.77. ''We've had a tough week. Commodities, nickel, copper have had a tough week ... Energy prices have been quite weak,'' Josef Schachter, portfolio manager of Spectrum United's Canadian Resource Fund said. ''So you've got the commodity board impacted partially (by) maybe you can call it the Asian flu again, and partially (by) the question of how strong or weak the economy is. The markets, though, are not that far from all-time highs and the fear level has really picked up here.'' Many strategists believe the choppiness will continue when Canadian trading resumes on Tuesday after the Victoria Day holiday weekend. Most market pundits will keep a nervous eye glued to the results of the Federal Open Market Committee meeting Tuesday for indications of the direction of U.S. interest rates. John Kellett, vice president of equities at Royal Bank of Canada, said he believes the markets should be less spooked by interest rates than by the bogeyman of weak corporate profits with weak commodities and continued competitiveness keeping consumer prices rock-bottom. ''Corporate profits are an issue in the market. The markets have already benefited to a considerable extent from lower interest rates. So the case for stock markets is getting harder and harder to make,'' John Kellett, vice president of equities at the Royal Bank of Canada, said. ''I think over the next few weeks, there's a bit of a malaise in the markets. I don't see much to change that.'' Although he shared Kellett's bleak view of the coming weeks in the equity market, Maison Placements Canada Inc. President John Ing was less sanguine about interest rates. ''I believe that interest rates will be the dominant theme. Notwithstanding the thinking that perhaps rates will remain stable I think there is pressure for rates on the upside. And that is the Achilles' heel to this market,'' he said. ''So technically, I think that the market could see a continuation of this choppiness and I think interest rates will be the bugaboo that the market will not like,'' Ing added. Despite, or perhaps because of the increase in investor jitters, Schachter stands firmly in the contrarian camp. He believes the renewed pessimism he sees sapping the market's energy at the moment will actually prove a boon for bargain hunters. And negativity could give way to optimism if interest rates continue to be stable. ''My expectation is that heading into the post-FOMC meeting, I think we are going to have a pretty significant summer rally -- 9,500, 9,600 on the Dow, 8,200 on the TSE. And the bears are going to reverse their course and swing onto the bull camp here and that's going to drive the market significantly higher,'' Schachter said. (For comments or ideas on this weekly column: sarah.edmonds(at sign)reuters.com) Copyright 1998 Reuters Limited.