TSX halts trading: "it's a technical issue"; N.Y. down after Fed rate announcement

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock exchange is dead in the water an hour after the trading day opened, meaning investors can't buy or sell on the country's largest market.

"We've halted the Toronto stock exchange and TSX Venture Exchange and we will update you as soon as we are able," said Caroline Quick, director of communications at the TSX.

"It's a technical issue", she added, declining to elaborate on the nature of the problem.

New York markets moved lower, giving back a big chunk of yesterday's gains that followed the U.S. Federal Reserve's move to cut its federal funds rate target to a range of zero to 0.25 per cent to deal with a rapidly worsening economy.

The Canadian dollar moved down 0.11 of a cent to 83.1 cents US after a weaker U.S. currency sent the loonie up more than two cents.

New York's Dow Jones industrials gave back 127.5 points to 8,79.6 following a 359-point jump.

The Nasdaq composite index declined 23.67 points to 1,566.22 while the S&P 500 index declined 14.75 points to 898.45 amid a much worse than expected earnings report from Morgan Stanley, which lost US$2.37 billion during its fiscal fourth quarter as it took a range of losses on assets amid one of the roughest quarters for investment banks.

The New York-based firm, which is aggressively building on its new status as a bank holding company, lost $2.34 per share for the quarter, much worse than the 34 cents a share that analysts had expected.

The January crude contract on the New York Mercantile Exchange was unchanged at US$43.60 ahead of an announcement expected later in the day that the Organization of Petroleum Exporting Countries will slash production by at least two million barrels a day to put a floor under prices that have retreated since hitting a US$147 high in July.

The February bullion contract in New York rose $36.20 to US$878.90 an ounce.

In other corporate news, The Globe and Mail reported that Canadian Pacific Railway Co. (TSX: CP.TO) plans to cut 600 union jobs in an effort to reduce spending during tough economic times.

The newspaper cites an internal message to staff that also laid out plans to restrict air travel, suspend bonuses and eliminate six flex days awarded to staff less than two years ago.

In the internal message, chief executive Fred Green conceded the moves will be unpopular but said they were necessary to survive a sharp economic downturn that has cut into the railway's freight delivery business.

Kingsway Financial Services Inc. (TSX: KFS.TO), a major insurance company under pressure from one of its biggest shareholders to improve its finances, says the company is cutting costs by about US$20 million next year.

Commercial printer Quebecor World Inc. (TSX: IQW.TO) says Pierre Karl Peladeau, Erik Peladeau, Jean Neveu and Jean La Couture have resigned from the Montreal company's board.

The moves come as former parent Quebecor Inc., headed by the Peladeaus, sues Quebecor World, which is restructuring under bankruptcy protection.

On the earnings front, pharmaceutical company MDS Inc. (TSX: MDS.TO) reported a fourth-quarter loss of US$255 million on a big after-tax writedown related to the troubled Maple medical-isotope reactor project.

And it said the results are preliminary and do not include another writedown announced last week, estimated at between $270 million and $370 million related to goodwill at its MDS Pharma Services division. That will be accounted for when it releases its annual report next month.

Travel operator Transat AT Inc. (TSX: TRZ.TO) said that non-cash and non-operating items drove the company into the red for fiscal 2008, amounting to a net loss of $50 million.

Transat also reported a $45.7 million writedown related to asset-backed commercial paper and a $2.3 million foreign exchange loss.

Meanwhile, U.S. Securities and Exchange Commission Chairman Christopher Cox blamed regulators for a decade-long failure to investigate Wall Street money manager Bernard L. Madoff, now accused of running a US$50 billion Ponzi scheme.

Cox said staff attorneys never bothered to seek a formal commission-approved investigation that would have forced Madoff to surrender vital information under subpoena.

Markets overseas were mixed.

Japan's Nikkei stock average rose 0.52 per cent, while Hong Kong's Hang Seng index rose 2.18 per cent.

In late morning trading, Britain's FTSE 100 rose 0.3 per cent, Germany's DAX index was off 0.12 per cent, and France's CAC-40 was down 0.85 per cent.

Shares of BNP Paribas plunged as much as 16 per cent Wednesday after the French bank said extreme market volatility triggered a loss of US$972 million over the first 11 months of the year due to steep losses in its investment banking operations over the last two months.