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Bombardier gets Jazz-ed; warnings from Greece

Bombardier's Q400 airplane.

Stories Report on Business is following today:

Jazz gives Bombardier a lift

Jazz Air will buy at least 15 turboprop airliners worth $454-million from Bombardier Inc., the two Canadian companies announced today.

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Jazz currently sells most of its seating to Air Canada, which uses the Halifax-based regional airline's smaller planes to serve lower-traffic routes.

The airline, owned by Jazz Air Income Fund, has options on 15 additional Q400s - making Friday's deal worth up to $937-million (U.S.).

The president and CEO of Jazz Air, Joseph Randell, says the new Q400 planes will be configured with 74 seats.

The Q400 NexGen plane model was launched in 2008 and is assembled in Toronto, at Bombardier's Downsview manufacturing plant.

Jazz's fleet currently consists of 64 CRJ regional jets and 64 older turboprop plane models, all made by Bombardier.

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TransCanada profit falls

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TransCanada Corp., Canada's largest natural gas shipper and a growing power producer, says its first-quarter profit fell by nearly 10 per cent amid lower revenues and continued capital spending on expansion projects.

The Calgary-based company's profit fell to $303- million (only $296-million attributable to common shares) from $334-million last year. Profit per share was 43 cents, down from 54 cents.

A more closely monitored measure of profitability, comparable earnings, was 48 cents per share or $328-million - missing analyst estimates by 2 cents per share.

The results were issued ahead of TransCanada's annual meeting in Calgary.

A statement by president and chief executive officer Hal Kvisle, who retires from the company in June, attributed the reduced profit to weaker power prices and higher business development costs associated with the Alaska Pipeline project - one of several TransCanada expansions that are planned or underway.

"TransCanada continues to make excellent progress on an outstanding suite of major projects that are part of our $22-billion capital program," Mr. Kvisle said.

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Federal deficit narrows

The federal government may be headed for a smaller deficit than it feared in the just past year, thanks to a quicker and stronger-than-expected recovery in economic activity.

Ottawa reported Friday that its deficit increased by a modest $902-million in February, compared to a $800-million surplus a year ago.

For the fiscal year - which has one more month to run - Ottawa's shortfall has now risen to $40.5-billion.

But that is still well below the record $53.8-billion deficit Finance Minister Jim Flaherty had projected in the March budget.

The Finance Department routinely cautions that timing factors can at times give a false impression of the state of the government's finances, and the monthly data is subject to revision, but the trend over the past few months has been generally rosier for the government.

The big surprise in February was that government revenues, which had been falling steadily, showed an $800-million improvement over last February.

Especially robust were revenues from corporations, which were $1-billion - or 31 per cent - stronger.

GST revenues were also up, but receipts from personal income taxes were down about seven per cent.

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Dire warnings from Greek PM

Details of a rescue plan with the International Monetary Fund and the European Union have entered the final stretch and by most accounts, a cash infusion isn't too far off. But Greek Prime Minister George Papandreou is warning that new austerity measures must be taken for the survival of debt-ridden Greece.

The talks over what extra steps Athens must take as part of the rescue, which will provide €45-billion in loans this year and up to a reported €120-billion over several years, are expected to be completed over the weekend, possibly by Sunday.

Once an agreement on further cuts is in place, Germany - which would be the largest EU contributor to the aid package and has insisted on strict conditions for releasing the money - is expected to quickly push the issue through parliament so funds can be approved before Greece faces a May 19 debt payment date.

"The measures we must take, which are economic measures, are necessary for the protection of our country. For our survival, for our future, So we can stand firmly on our feet," Mr. Papandreou said in Parliament.

"It is a patriotic duty to undertake this, with whatever political cost, which is tiny faced with the national cost of inaction ... and indecision," he said.

Indications that help will soon be approved for Greece has calmed markets. Greece's borrowing costs fell for the second day, with the interest rate gap, or spread, between Greek 10-year bonds and their benchmark German equivalent narrowing to 6.20 percentage points Friday, from a staggering 10 points Wednesday.

Mr. Papandreou's government is already implementing a €4.8-billion austerity package that has trimmed civil servants' income, frozen pensions and hiked taxes which has already drawn the ire of labour unions.

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Manufacturing pushes economy

Statistics Canada says the economy grew by 0.3 per cent in February, driven mostly by manufacturing.

The agency says real gross domestic product was also boosted by gains in mining.

Manufacturing output overall rose 1.2 per cent in February, but durable goods makers showed 1.4 per cent growth.

Overall, the mining sector increased 0.4 per cent in February, although with oil and gas taken out, output grew by 7.6 per cent.

There were modest increases in retail trade and construction.

The volume of wholesale activity declined 1.4 per cent following five consecutive monthly increases.

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Quebec stations changing hands

Cogeco Inc. says it will pay $80-million cash to buy the Quebec radio stations currently owned by Corus Entertainment Inc. .

The 11 Corus stations are in several cities throughout the province, including four in Montreal, two in Quebec and two in Sherbrooke.

They will join the five radio stations that Cogeco already owns in Montreal, Quebec, Trois-Rivieres and Sherbrooke.

The deal between Cogeco and Corus will require approval from Canada's broadcasting regulator.

Toronto-based Corus said earlier this year that it intended to sell the Quebec radio stations, which have suffered along with the rest of the industry because of a drop in advertising revenue.

Corus also has radio stations in other parts of Canada but as well as several major specialty cable television channels.

Montreal-based Cogeco owns both radio stations and Canada's fourth-largest cable TV system.

Cogeco says it plans to reach new audiences by adding to its radio network in Quebec.

"The Corus radio stations are a natural fit with Cogeco's existing radio stations," said Louis Audet, the president and chief executive officer of Cogeco Inc.

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Gold hits 2010 high

Gold hit a 2010 high above $1,170 (U.S.) an ounce in Europe on Friday, fuelled by euro strength and investors continuing to embrace the metal's safe-haven properties on unease over euro zone sovereign debt levels.

Spot gold reached a peak of $1,176.40 an ounce and was bid at $1.174.55 an ounce at 0913 GMT, against $1,166.10 late in New York on Thursday. It also hit a record peak in Swiss francs at 1,281.19 francs an ounce.

The precious metal has rallied 5.3 per cent so far in April, its biggest one-month rise since November 2009, as credit ratings downgrades of Greece, Spain and Portugal unleashed a wave of risk aversion, channelling money into gold.

Financial markets were settling down slightly, helping the euro to rally, on hopes that a multibillion-euro aid package for Greece would be hammered out within days and prevent the crisis from spilling over to other countries.

But the fear of contagion was clearly evident in gold, analysts said, with prices now on track to move back towards their December high, a record peak of $1,226.10 an ounce.

"Gold has been trading in a range of $1,160-1,175, and if $1,175 gets taken out, we should be in for a sharp rally," said Afshin Nabavi, head of trading at MKS Finance in Geneva. "We could head for the $1,200 area."

"Precious metals have put in a very good performance this week," he added. "Once the metals show confidence and direction, we see investors coming back in, given the situation in Europe."

U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange rose $7.30 to $1,176.10 an ounce.

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U.S. economy expands

The economy grew at a solid 3.2 per cent pace during the first quarter of this year as consumers boosted their spending by the most in three years.

The Commerce Department's initial estimate of the economy's performance in the January-to-March quarter, released Friday, provided more evidence that the economy is strengthening. It marked the third straight quarterly gain as the United States heals from the longest and deepest recession since the 1930s. Still, growth was weaker than in the fourth quarter of last year, when the economy grew at 5.6 per cent.

Consumers rebounded and powered the first-quarter's growth. They increased their spending at a 3.6 per cent pace, the strongest showing since early 2007 - before the economy tipped into a recession. That marked a big improvement from the fourth quarter when consumer spending grew at a lacklustre 1.6 per cent pace.

Even though consumers aren't spending as freely as they normally do early in strong economic recoveries, they are spending sufficiently to keep the economy expanding.

Looking ahead, analysts believe consumers will be wary of stepping up spending much further. The unemployment rate is high at 9.7 per cent and is expected to stay elevated in the months ahead. Sluggish income growth and problems getting loans could restrain shoppers' appetite to spend, they say.

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From today's Report on Business

Arctic drilling faces tough questions

Torstar's CanWest paper bid hits banking hurdle

How a late snow storm led to an early release

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