By: Franco Pingue
Reuters
Wednesday, March 19, 2003

TORONTO, March 19 (Reuters) - Toronto stocks closed with a minor gain on Wednesday, ending higher for a fifth straight session, as the telecoms sector staged a mini-rally amid a general market bracing for the start of war in Iraq.

The Toronto Stock Exchange S&P/TSX composite index .GSPTSE rose 14.87 points, or 0.23 percent, to close at 6,453.48. In its five-day winning streak, the key index has pushed up 3.6 percent.

"With the action we've seen over the past week it's quite obvious that both in Canada and the United States investors are discounting a pretty quick and decisive victory for the United States," said Elvis Picardo, chief market strategist at Global Securities Corp.

"But expectations with regard to a positive outcome for the war are too high and we really need to see if this rally is sustainable going into the end of the week."

U.S. President George W. Bush said his forces will invade Iraq if President Saddam Hussein does not flee the country by 8 p.m. Wednesday (0100 GMT Thursday).

The telecoms sector finished the session ahead 2 percent and helped balance a 2.4 percent decline in information technology stocks. Five of the TSX's 10 subindexes closed higher and the industrials sector ended unchanged.

Shares of Telus Corp. T.TO , Canada's No. 2 phone company, rose 90 Canadian cents, or 5.8 percent, to C$16.45, while BCE Inc. BCE.TO , the country's dominant telephone service provider, moved up 22 Canadian cents, or 0.8 percent, to close at C$27.92.

Leading the tech decline were contract electronics manufacturer Celestica Inc. CLS.TO , which shed 93 Canadian cents, or 4.7 percent, to C$18.92, and graphics chip maker ATI Technologies Inc. ATY.TO , which dropped 45 Canadian cents, or 6 percent, to C$6.70.

Investors attributed the tech share drop to profit-taking after the sector climbed 3 percent on Tuesday and to a gloomy outlook from U.S. semiconductor maker Microchip Technology Inc. MCHP.O

Microchip cut its fourth-quarter revenue and earnings guidance, saying sales have slowed because of U.S. preparations for a war with Iraq and tensions with North Korea.

Gold stocks tend to rise during times of political uncertainty, but a 1.9 percent dip among Canadian gold-mining issues was pinned on an unwinding of recent safe-haven buying.

Placer Dome Inc. PDG.TO slipped 35 Canadian cents, or 2.5 percent, to C$13.80, while Kinross Gold K.TO dipped 39 Canadian cents, or 4 percent, to C$8.60.

Market momentum was positive with 529 issues advancing and 516 declining. Volume picked up as 190 million shares valued at C$2.3 billion changed hands.

The blue-chip S&P/TSX index added 0.89 points, or 0.24 percent, to finish the session at 367.83.

Investors south of the border placed bets on a swift resolution to war in Iraq, but disappointing sales at Oracle Corp. ORCL.O dragged down the tech-laced Nasdaq.

The Dow Jones industrial average .DJI added 71.22 points, or 0.87 percent, to close at 8,265.45, while the Nasdaq composite index .IXIC slipped 3.48 points, or 0.25 percent, to 1,397.07.

Despite recent strength in equity markets, some experts caution that there are still a lot of underlying fundamentals that are not behaving well regardless of war.

"We still have a lot of people in the U.S. that are losing jobs, and the consumer is tapped out because they've spent a lot of money," said Adrian Mastracci, investment counsel and president of KCM Wealth Management Inc.

"We just have to get ready for a lot of volatility because nobody knows what's going to happen."

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