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At the open: Stocks dip; Hudson’s Bay drops

A bronze plaque identifies the Hudson's Bay Company flagship store in Toronto, in this January 26, 2006 file photo.


The Toronto stock market was lower Tuesday as further weak inflation data from the eurozone raised expectations that the European Central Bank will take action to support a fragile recovery.

The S&P/TSX composite index lost 20.97 points to 14,659.79.

A prominent decliner was Hudson's Bay Company, even as the retailer moved from a year-ago loss to a profit.

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HBC posted first-quarter net earnings from continuing operations of $176-million or 97 cents a share, compared with a loss of $22-million or 19 cents a share in the same quarter of 2013. Retail sales jumped to $1.85-billion, up from $884-million in the same quarter last year. Same-stores sales were up 2.8 per cent year-over-year but its shares gave back almost all of Monday's 1.5 per cent advance, losing 19 cents to $17.08.

The Canadian dollar was down 0.15 of a cent to 91.61 cents (U.S.) a day before the Bank of Canada delivers its next interest-rate announcement.

U.S. indexes were also in the red with the Dow Jones industrials 47.89 points lower to 16,695.74, the Nasdaq shed 7.49 points to 4,229.71 while the S&P 500 index dipped 4.29 points to 1,920.68.

The European Union's statistics agency said that inflation in the eurozone came in at 0.5 per cent in May, down from 0.7 per cent in April and short of forecasts for 0.6 per cent.

The data raised concerns that the 18-country eurozone could fall into outright deflation, a sustained drop in consumer prices that chokes off growth as consumers delay purchases and businesses postpone investment. It also elevated expectations that the ECB will announce stimulus measures as part of its scheduled rate announcement on Thursday.

A commentary from Barclays Research said the ECB's inflation projections coming out the same day are expected to contain significant downward revisions.

"Hence, we do not see any other option for the ECB but to ease monetary policy further," Barclays said.

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"Given constraints on the credit side, we think the ECB will also deploy credit easing measures."

Many analysts expect the bank to cut its main interest rate from its current record low of 0.25 per cent.

On Tuesday, investors will also consider the April report on U.S. factory orders, which is expected to show a gain of 0.6 per cent.

U.S. automakers also release sales figures during the day.

General Motors, in the throes of a recall crisis, saw sales rise 13 per cent from a year ago. Sales of the Chevrolet Corvette more than tripled, while GMC Sierra pickup truck sales rose 14 per cent.

The base metals component led TSX decliners, down 1.45 per cent while July copper declined four cents to $3.13 a pound.

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The gold sector was off a slight 0.1 per cent as August bullion faded 80 cents to $1,243.20 an ounce.

The energy sector rose 0.2 per cent even as June crude down five cents at $102.42 a barrel.

In other corporate developments, Element Financial Corp. will pay $1.4-billion cash to buy PHH Corp.'s North American fleet management services business. PHH Arval had about $4.6-billion of assets as of March 31, including $4-billion invested in fleet leases. Element Financial shares fell 34 cents to $12.96.

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