US markets slipped at the open after a disappointing retail sales figure, but clawed their way back after an index of consumer confidence climbed to its highest level in two years. May’s retail sales fell 1.2%, although the majority of retail sectors posted gains during the month. Automobile sales unexpectedly declined, while sales of building materials dropped sharply after the tax-rebate induced rush on major appliances over the preceding months. Research in Motion and Motorola appear to have buried the hatchet, agreeing to cross-license various patents and end all outstanding litigation between the companies. Large cap companies in the TSX index are broadly but mildly higher his morning, with Bell Canada being the only noticeably weak issue after touching a new 52-week high yesterday. The TSX is up 40 pts. The Dow is down 8 pts.

The Canadian dollar is soft this morning as oil retreats from yesterday’s run-up, slipping 38 bps to US$.9658. Bond yields are steady at 2.76% for the 5-year Canada and 3.41% for the ten. Gold is up $4 to US$1226.20/oz. Oil is off 84 cents to US$74.64/barrel.

The TSX index has been on a bit of a rollercoaster this morning as a continuation of strong earnings reports is offset by profit taking after a year-long run-up in equities. Canadian insurer Manulife reported profits that exceeded average estimates by a wide margin, causing a decent jump in their share price. Bell Canada and auto parts manufacturer Magna Int’l also beat forecasts, with the latter announcing plans to eliminate its dual share structure which is helping send the stock 15% higher this morning.  Canadian building permits jumped 12% in March, beating every economists estimate. Initial jobless claims in the US declined for the third consecutive week, in line with forecasts. The TSX is down 42 pts. The Dow is down 100 pts.

The Canadian dollar is getting rather badly bruised as the risk trade is “off” at the moment, sending commodity prices lower and the greenback higher. The Loonie is down almost a full penny at US$.9624. Bond yields continue to sink, partly due to the flight to quality but also due to the fact that European debt concerns may filter down to any rate decisions by the Bank of Canada. The 5-year Canada bond yields 2.80% and the 10-year 3.48%. Oil is down $1.13 to US$78.84/barrel. Gold is up $11.30 to US$1186.30/oz.

American markets are strong this morning after manufacturing activity climbed at the fastest pace in six years, and due to a weekend agreement between the European Union, the IMF and the beleaguered Greek government. Terms of the deal will extend a three-year lifeline to Greece as they get their economic house in order, including such measures as tax hikes, wage freezes and pension cuts. The ISM manufacturing index climbed to 60.4 in March, with the ISM services sector index due on Wednesday. Employment reports from both sides of the border are due out Friday. The mining sector in general is weak this morning after Australia announced a 40% tax on profits from resource firms, while China raised banks reserve requirements for the third time this year. The TSX is down 23 pts. The Dow is up 88 pts.

The Canadian dollar is climbing this morning as oil prices rise, up a third of a penny to US$.9878. Bond yields are steady with the 5-year Canada yielding 3.01% and the 10-year 3.67%. Gold is up $4.80 to US$1185.50/oz. Oil is up 42 cents to US$86.57/barrel.