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Equity Markets

Canada's main stock index opened sharply lower on Thursday despite a slew of better-than-expected quarterly results, as investors sought refuge in safe-haven assets amid rising tensions between the United States and North Korea.

The Toronto Stock Exchange's S&P/TSX composite index fell 57.36 points, or 0.38 per cent, to 15,159.97 shortly after the open.

Materials was the only gainer among the index's 10 main sectors.

World stocks fell for a third day on Thursday and investors moved back into the Swiss franc, yen and gold as North Korea ratcheted up tensions with the United States with a threat to land a missile just short of the U.S. territory of Guam.

Markets had seen a tentative recovery in risk appetite in U.S. and early Asian trading, but as the war of words resumed Asian stocks dropped back and London, Frankfurt and Paris all lost 0.5-1.2 per cent.

In New York, the Dow Jones Industrial Average fell 75.62 points, or 0.34 per cent, to 21,973.08. The S&P 500 lost 10.71 points, or 0.43 per cent, to 2,463.31. The Nasdaq Composite dropped 40.64 points, or 0.64 per cent, to 6,311.70.

Manulife and Sun Life stock are on the move after the two big insurance companies reported late Wednesday second-quarter earnings that beat market expectations. Manulife Financial Corp. reported core earnings of $1.17-billion, or 57 cents per share, for the second quarter, compared with $833-million, or 40 cents a share the year before. Its shares slipped 1 per cent in early trading.

Sun Life reported net income of $574-million, or 93 cents per share, in the second quarter, compared with $480-million, or 78 cents per share in the same period the year before. Analysts on average had forecast earnings of 89 cents per share, according to Thomson Reuters I/B/E/S data. Analysts on average had expected earnings of 55 cents per share. Its shares gained 1.6 per cent in early trading.

Quebecor Inc. says an $87.8-million gain from the sale of wireless licences outside its home province helped boost the telecommunication and media company's second-quarter profit to $132.4-million in the second quarter. Its shares jumped 5.3 per cent.

Coat maker Canada Goose reported a smaller quarterly loss as the company sold more merchandise across its sales platforms. Its shares rose 3.3 per cent.

First Quantum Minerals could come under pressure after it said it plans to suspend operations at its Ravensthorpe nickel mine in Western Australia next month due to persistently weak nickel prices, affecting around 450 employees and contractors. Its shares fell 1.1 per cent.

European shares slipped in early deals on Thursday, extending losses as shares in cyclical sectors fell and some large firms went ex-dividend, while earnings spurred some large individual company moves.

The pan-European STOXX 600 index was down 0.2 percent as basic resources and banks fell, while euro zone blue chips also declined 0.2 percent.

Britain's FTSE 100 dropped 1.2 per cent as heavyweights Anglo American, BT Group, Rio Tinto and Lloyds fell after going ex-dividend, while Germany's DAX retreated 0.8 per cent. France's CAC was off 0.3 per cent.

Asian stocks were mostly lower Thursday as investors pondered escalating tensions over North Korea's nuclear ambitions. Japan's benchmark Nikkei 225 inched down less than 0.1 per cent to finish at 19,729.74. Australia's S&P/ASX 200 edged down nearly 0.1 per cent to 5,760.90, while South Korea's Kospi fell 0.5 per cent to 2,357.84. Hong Kong's Hang Seng dipped 1.0 per cent to 27,470.73. The Shanghai Composite slipped 0.5 per cent to 3,260.88.

Commodities

Gold hit the highest levels in two months on Thursday as the United States and North Korea exchanged more threats, prompting investors to buy bullion as a safe haven asset.

"For now, the uptrend is very much intact in gold, reacting to external geopolitical events," said Jonathan Butler, commodities analyst at Mitsubishi in London.

Spot gold was up 0.2 per cent at $1,279.33 per ounce after hitting $1,280.53 an ounce, its highest level since June 9. Gold climbed 1.3 per cent in the previous session, its biggest gain since mid-May.  U.S. gold futures for December delivery rose 0.5 percent to $1,285 per ounce.

Oil prices rose on Thursday, lifted by a sustained decline in inventories and as Saudi Arabia prepared to cut crude supplies to its prized Asian customers.

Crude is down nearly 7 per cent so far this year, suppressed in large part by concern that OPEC and its partners may not be able to force global oil inventories to drop by cutting production.

Saudi Arabia said on Tuesday it would cut supplies to most buyers in Asia - the world's biggest oil-consuming region - by up to 10 percent in September.

Brent crude futures were up 49 cents at $53.19 a barrel, while U.S. West Texas Intermediate crude was up 32 cents at $49.88.

Currencies and bonds

The Canadian dollar continued to fall Thursday after hitting a nearly four-week low against its U.S. counterpart on Wednesday as worries about increased U.S.-North Korea tension weighed, offsetting higher oil prices and stronger-than-expected domestic housing data.

The U.S. dollar rose against a trade-weighted basket of currencies on Thursday as investors consolidated positions with the low-yielding Swiss franc and Japanese yen supported amid deepending anxiety over tensions between the United States and North Korea.

"The markets are looking for direction after Wednesday's sharp moves and geopolitical concerns will dominate investor mindsets in the coming days," said Esther Maria Reichelt, an FX strategist at Commerzbank in Frankfurt.

The dollar index was trading 0.2 per cent up at 93.73. It hit a 15-month low of 92.548 on Aug. 2.

The flight-to-safety into U.S. Treasuries also abated overnight. The 10-year Treasury note yield initially fell to a six-week low of 2.212 percent as bond prices rose, but climbed back to 2.248 per cent. The Canada 10-year bond was up 0.07 at 1.89.

"U.S. equities managed to cut its losses towards yesterday's close and while the VIX (volatility index) did pop higher, it still remains at an overall low level. Furthermore, the benchmark Treasury yield also climbed away from lows," said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.

"These developments suggest that risk aversion caused by geopolitical tensions in North Asia are temporary in nature, as long as it does not involve military conflict."

Stocks set to see action

Two of Canada's biggest insurance companies on Wednesday reported second-quarter earnings that beat market expectations, benefiting in part from strong growth in Asia.

Canada's biggest life insurer Manulife Financial Corp. reported core earnings of $1.17-billion, or 57 cents per share, for the second quarter, compared with $833-million, or 40 cents a share the year before. Analysts on average had expected earnings of 55 cents per share, according to Thomson Reuters I/B/E/S data.

Sun Life, Canada's third-biggest life insurer, reported net income of $574-million, or 93 cents per share, in the second quarter, compared with $480-million, or 78 cents per share in the same period the year before. Analysts on average had forecast earnings of 89 cents per share, according to Thomson Reuters I/B/E/S data. Underlying earnings per share, excluding one-off items, came in at $1.12 per share, compared with analysts forecasts of 97 cents per share.

Quebecor Inc. says an $87.8-million gain from the sale of wireless licences outside its home province helped boost the telecommunication and media company's second-quarter profit to $132.4-million in the second quarter. Net income was $1.09 per basic share, up from eight cents per share, or $9.8-million in the comparable period of 2016.

Alternative lender Callidus Capital Corp. on Wednesday denied media reports that said the company is the subject of whistle-blower complaints with Canadian market regulators. Callidus shares fell 21 per cent after The Wall Street Journal published an article that stated at least four individuals have filed statements with the Ontario Securities Commission alleging fraud at the firm and its private equity parent Catalyst Capital Group Inc. Callidus and Catalyst, both of which lend money to financially distressed companies, are accused by whistle-blowers of inflating the value of assets and deceiving borrowers on the terms of loans, according to The Journal.

Canadian Tire Corp. says its second-quarter results benefited from a pickup in sales growth in June after a slow start to the spring and summer season. The company's overall revenue was $3.41-billion during the quarter ended July 1, up 1.8 per cent from the comparable period last year Excluding petroleum sales, Canadian Tire's revenue was up $34-million or 1.2 per cent – mostly from retail sales at banners that include Canadian Tire, Mark's and Sport Chek. Net income was up nine per cent at $217.0-million and diluted earnings per share was up 14.1 per cent at $2.81.

Luxury apparel retailer Canada Goose Holdings Inc., reported a smaller quarterly loss as the company sold more merchandise across its sales platforms. Total comprehensive loss for the company narrowed to $12-million, or 11 cents per share, in the first quarter ended June 30, from $14-million, or 14 cents per share, a year earlier. The Toronto-based company's revenue rose to $28.2-million from $15.7-million.

First Quantum Minerals Ltd. said late Wednesday it plans to suspend operations at its Ravensthorpe nickel mine in Western Australia next month due to persistently weak nickel prices, affecting around 450 employees and contractors. The mine will be placed on care and maintenance, which is expected to take effect in early October, it said.

Texas billionaire brothers known for success in the fracking business and for funding U.S. conservative causes are betting on the Canadian oil-field-service industry returning to better times. Wilks Brothers LLC, owned by Farris and Dan Wilks, has increased its stake in Calfrac Well Services Ltd, the Calgary-based hydraulic fracturing, or pressure-pumping, company that has seen its share price climb by a third since the start of July.

Shares of Kohl's were up 3.96 per cent in premarket trading after the department store operator reported a rise in quarterly profit.

Perrigo was up 9.5 per cent after the company raised its full-year adjusted earnings forecast.

Blue Apron shares rose 6.73 per cent after the meal-kit delivery service provider reported a rise in revenue in its first quarterly report since debut.

Twenty-First Century Fox Inc. was down 2.65 per cent following quarterly revenue that fell short of expectations.

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Economic News

(8:30 a.m. ET) Canadian new housing price index for June is announced. Estimate is a rise of 0.4 per cent from May and 4.1 per cent year over year.
(8:30 a.m. ET) U.S. initial jobless claims for week of Aug. 5 are released.
(8:30 a.m. ET) U.S. PPI Final Demand for July is revealed. Consensus is an increase of 0.1 per cent from June and 2.3 per cent year over year. Excluding food and energy, the projections are rises of 0.2 per cent and 2.1 per cent, respectively.
(2 p.m. ET) U.S. budget deficit for July is announced.

With files from Reuters and Bloomberg