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Oil spill's effects, and Fairfax Financial's profit

This satellite photo taken April 26, 2010, shows cleanup vessels working in the area of an oil slick created after the April 20 explosion of the Deepwater Horizon oil rig in the Gulf of Mexico.

AP Photo/ DigitalGlobe

Fairfax reverses loss on investment gains

Fairfax Financial Holdings Ltd. earned $290.2-million (U.S.) in the first quarter on the back of strong investment gains, turning around the $39.6-million loss it announced a year ago.

The money that Fairfax made on its investments more than made up for the $136.8-million in losses the insurer experienced as a result of the Chilean earthquake.

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Fairfax's investment gains amounted to $415.6-million in the three months ended March 31. It lost $153-million during the same period a year ago, when it was stung by the investments it then held in a number of media companies, such as Torstar Corp., CanWest Global Communications Corp., and AbitibiBowater Inc. The company wrote down the value of most of those holdings on its books.

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Canadian Oil Sands boosts payout

Canadian Oil Sands Trust, the largest partner in the Syncrude Canada Ltd. oil sands project, said Thursday its first-quarter profit jumped almost fourfold despite a drop in output as crude prices surged.

Canadian Oil Sands raised its quarterly cash distribution by 43 per cent to 50 cents a unit, citing its expectation that crude prices will stay strong.

The trust earned $167-million, or 35 cents per unit, up from $43-million, or 9 cents, in the first quarter of 2009.

It was expected to post a profit of 28 cents a unit, according the average analyst forecast compiled by Thomson Reuters I/B/E/S.

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Profit surged on oil prices that rose 86 per cent from the first quarter of 2009 to average $78.37 (U.S.) a barrel.

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Gulf oil spill may affect U.S. drilling plans

The Obama administration said Thursday that the massive oil spill along the Gulf Coast will be considered in a planned expansion of offshore drilling and will become part of the debate on climate change in Congress.

White House press secretary Robert Gibbs said the cause of the oil rig explosion, still not determined, could affect what areas the government would open for future drilling.

But Mr. Gibbs and other officials said President Barack Obama remains committed to plans to expand offshore drilling to areas that now are off limits.

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Mr. Obama has called for new offshore drilling in the Atlantic Ocean from Delaware to central Florida, plus the northern waters of Alaska. He also wants Congress to lift a drilling ban in the oil-rich eastern Gulf of Mexico, 200 kilometres from Florida beaches.

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Time magazine likes Carney

Bank of Canada Governor Mark Carney has been named to Time magazine's seventh annual list of the world's 100 most influential people.

Mr. Carney was No. 21 on the list, which includes the likes of U.S. President Barack Obama, former Republican vice-presidential candidate Sarah Palin, International Monetary Fund managing director Dominique Strauss-Kahn, golfer Phil Mickelson and Lady Gaga.

``Now that the world's richest nations are working to co-ordinate new financial rules, Carney is clamouring to stay focused on the causes of the crisis - like banks not holding enough capital and Western consumers spending too much - instead of getting distracted by populist zeal,'' Time's blurb on Mr. Carney said.

``The ex-Goldman Sachs banker, who isn't afraid to crack a joke or roll his eyes, has also been warning Canadians not to take on too much personal debt,'' Time continued, crediting Mr. Carney with ``the sort of straight talk one rarely hears from a person whose job it is to juice the economy.''

Time also refers to the Governor as "good-looking," "charming" and "wicked smart."

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Canada pledges funds for bridge

Michigan Governor Jennifer Granholm said Thursday that Canada is prepared to cover up to $550-million (U.S.) of Michigan's costs for a proposed new international bridge across the Detroit River.

The elements that the Canadian government are offering to pay for wouldn't be funded by the U.S. government or the public-private partnership seeking to build the bridge.

The money, pledged in a letter to Ms. Granholm from Canadian Transport Minister John Baird on Thursday, would go toward the Detroit River International Crossing, which proponents are proposing to build about three kilometres downstream from the existing Ambassador Bridge.

"Given the importance of this new crossing to the economic security and future prosperity of the United States and Canada, on behalf of the Government of Canada, I am pleased to inform you that Canada is prepared to increase its financial participation in the DRIC project," Mr. Baird said in the letter.

Ottawa would expect to be repaid in part from the toll revenues the new bridge would generate, he said.

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Corporations can handle higher rates

Canada's corporate sector is in a strong position to withstand the higher interest rates that are on the horizon but remains at risk from a stronger dollar, according to a new report by one of the country's major banking groups.

The CIBC World Markets report says Corporate Canada is benefiting from their low debt levels, which put the country's companies in better shape to withstand higher interest rates than Canadian households.

The report estimates corporate debt service payments are equal to only 30 per cent of total operating earnings today, down from 100 per cent during Canada's last full-blown recession in the early 1990s.

The Canadian dollar's value has varied widely over the past two decades, rising from about 62 cents per share at the low point in early 2002 to near parity with the American dollar at the current time.

The report's author, senior economist Peter Buchanan, says that the Canadian dollar's "rags-to-riches story" has mirrored the turnaround in the resource sector but has run further than warranted by some measures.

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How Greece's crisis could affect Canada

Any fallout from Greece's debt crisis on Canada should be "relatively tame" but the country could be sucked into a European fiscal panic through financial markets, TD Securities says. Trade between Canada and Greece is tiny, and neither Canadian banks nor investors appear to hold much Greek debt, chief Canada macro strategist Eric Lascelles said in a research note yesterday. There could be an indirect impact, though, if there is financial contagion and panic, he said.

"For instance, bank credit spreads have begun to march outwards as the market prices in the risk that a Greek default could impact the bottom lines of certain banks," Mr. Lascelles noted. "Even for banks without a significant exposure to Greece, the risk that counterparty banks or investors were exposed would increase the cost of borrowing for Canadian banks, and in turn engender some reluctance to lend."

Canada is unlikely to be "tarred" by the same brush as investors increasingly focus on fiscal issues, given its healthy finances. Indeed, he said, some investors could see a country such as Canada as a haven, though the U.S. is still seen by markets as the safest region.

"Should market concerns intensify, the Canadian dollar would likely fall versus the U.S. dollar, and commodity prices would decline modestly," Mr. Lascelles said. "Canadian equities would dip in synchronization with the rest of the world as investors favoured the safety of bonds. In an extreme scenario, the Bank of Canada's plan to raise interest rates could even be kyboshed.

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U.S. orders Bombardier fixes

U.S. air safety regulators ordered a directive today calling for mandatory fixes on certain models of Bombardier Inc.'s Q400 turboprop, a move aimed at preventing potentially dangerous stalls of the plane in icy conditions, according to the Wall Street Journal.

The Federal Aviation Administration will order airlines that operate the planes to make fixes or replace parts in order to address the problem, involving possible malfunctions of devices that help warn pilots of an impending stall, says the report.

The directive comes on the heels of the Colgan Air crash in Buffalo, N.Y. in February, 2009, involving a Q400.

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China reassures foreigners

Chinese premier Wen Jiabao reiterated reassurances to foreign companies that they will not be discriminated against in the Chinese market, while calling on European leaders to recognize China as a market economy.

Mr. Wen's comments after meeting with European Commission president Jose Manuel Barroso on Thursday come a few days before China is due to implement sweeping new regulations on standards, that foreign technology firms and manufacturers say will raise the costs and risks of doing business in the country.

Mr. Wen also said on Thursday that the world economy still needs time to shake off the impact of the global financial crisis.

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Olympics boost payroll employment

Boosted by the Vancouver Winter Olympics, British Columbia led the way as non-farm payroll employment increased nationally by 0.1 per cent, or 8,300 jobs, in February.

Statistics Canada reports notable job gains in accommodation and food services; investigation and security services; and employment services - all largely associated with the Olympic Games.

In manufacturing, payroll employment rose by 11,200 in February, the largest increase for this sector since January 2008.

The agency says a number of manufacturing industries were on the rise in February, most notably plastic product manufacturing; motor vehicle assembly; bakeries and tortilla manufacturing; agricultural, construction and mining machinery manufacturing; and motor vehicle parts.

Other industries with notable job gains in February were employment services; support activities for mining, quarrying, oil and gas extraction; investigation and security services; and business support services.

These gains were partly offset by declines in retail trade, mainly in grocery stores and gasoline stations, along with declines in educational services.

Average weekly earnings, including overtime, of non-farm payroll employees was $843.91, up 2.8 per cent from February, 2009.

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Demand gives Potash a lift

Potash Corp. of Saskatchewan Inc. [[entity]]otash Corp. of Saskatchewan Inc. [[/entity]]OT-T says increased demand for its products in the first quarter signals a longer-term rebound for the company, as farmers catch up on fertilizer applications they missed last year.

The Saskatoon-based company says it earned nearly half-a-billion dollars in the three months ended March 31, as sales improved for the three types of crop nutrient that it produces - especially potash.

The company sold 2.5 million tonnes of potash in the first quarter, five times higher than it did in the comparable period of 2009 when the world economy was in the depths of a major recession.

Potash Corp., which reports in U.S. currency, had $449.2-million or $1.47 per share of net income and $1.7-billion of sales.

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Cenovus sees slight improvement

Oil-and-gas producer Cenovus Energy [[entity]]enovus Energy [[/entity]]VE-T is reporting a slight improvement in profit and a big increase in first-quarter sales at both its production and refining operations.

The Calgary-based company had $3.6-billion in revenue before royalty payments in the quarter, up nearly 32 per cent from the comparable period of 2009, when Cenovus was still part of EnCana Corp.

Profit also increased but by a modest 2 per cent, rising to $525-million or 70 cents of profit.

And Cenovus reported its cash flow - an important financial measure in the oil and gas industry - actually fell to $721-million or 96 cents per share, down 3 per cent from the same time last year.

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From today's Report on Business

In Athens, fear of a domino effect

Western provinces unite to woo emerging markets

Shell puts oil sands expansion plans on hold

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