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At the open: Stocks rise as ‘fiscal cliff’ optimism spreads

U.S. President Barack Obama holds up his pen as he delivers a statement on the U.S. "Fiscal Cliff" in the East Room of the White House in Washington, November 9, 2012.

Jason Reed/Reuters

North American stock markets opened slightly higher, as bargain hunting in individual securities picks up speed after last week's nasty losses.

In early trading, the S&P/TSX index is up 7 points, or 0.06 per cent, at 12,204; the S&P-500 index is up $2.10, or 0.1 per cent, at 1,381; and the Dow Jones industrial average is up 10 points, or 0.08 per cent, at 12,825.

Commodities are also higher, with oil up 12 cents at $86.19 (U.S.) and gold up $3.40 at $1,734.

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Concerns about the "fiscal cliff" loom large in the minds of traders and whether Congress will be able to avert the more than $600-billion (U.S.) in tax increases and spending cuts at the start of next year. But a strong likelihood that Republicans and Democrats will be able to squeak out an agreement of some kind have many thinking last week's sell-off was overdone. Politicians from both parties on the Sunday morning talk shows this weekend showed there's optimism, as well as determination, that a deal will get done.

Europe remains a sour point, however, and some fresh developments on that front are expected today as euro-area finance ministers meet. They will likely agree to prevent the country from defaulting on €5-billion of bonds that expire later this week, but may stop short of approving the $40-billion (U.S.) of financial aid requested by Greece. Greece took a step in receiving that aid earlier today by passing its 2013 budget.

Overnight markets were mixed, with Japan down nearly 1 per cent after the country reported its gross domestic product fell 0.9 per cent in the July-September period, or 3.5 per cent on an annualized basis. That was its first contraction of the year.

Economic data out of China was more uplifting, as further signs emerged that the country's economic pace is starting to pick up again. Its trade surplus widened to $32-billion (U.S.) in October from $27.7-billion the previous month, with exports rising 11.6 per cent. Both those figures beat economists' expectations.

Volumes will probably be a little thinner than usual today. Bond markets and government offices are closed in both Canada and the U.S. in observance of Remembrance Day and Veterans Day, although stock markets are open for the full day.

Here's a look at the stocks moving on news this morning:

Research In Motion Ltd. is up 3.3 per cent in Toronto after announcing it planned to introduce its long-delayed BlackBerry 10 platform and devices on Jan. 30. It had earlier said the new software would make its premier sometime in the first quarter.

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Retailer Leon's Furniture Ltd. is acquiring archrival The Brick Ltd. for about $700-million in a friendly deal. Leon's shares are down 0.4 per cent; The Brick shares are up 52 per cent.

Caterpillar shares are down 0.7 per cent after JPMorgan downgraded the stock today to "neutral" from "overweight." It's the first time it hasn't recommended the stock since April of 2009 amid concerns about reduced capital expenditures in the mining sector.

Shares in Jefferies Group Inc. are up 17 per cent after Leucadia National Corp. said it would acquire the shares of the investment bank that it doesn't already own.

D R Horton shares are up 3 per cent after the home builder announced its fiscal fourth-quarter profit nearly tripled and said its year-end backlog is the largest since 2007.

Shares in Titanium Metals are up 42 per cent after announcing late Friday it has agreed to be bought by Precision Castparts Corp. for $2.9-billion (U.S.).

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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