Rogers, Bell buy control of MLSE

The Toronto Maple Leafs have some new owners as telecom giants Rogers and Bell Canada are teaming up to buy a majority stake in Canada's biggest sports franchise company, Maple Leaf Sports & Entertainment, for $1.3 billion.

The two companies, fierce rivals in the business of cellphone and Internet services, said Friday they will each pay current owner the Ontario Teachers' Pension Plan about $533 million for a 37.5 per cent chunk of the sports ownership company.

MLSE owns the Leafs of the NHL, the NBA's Toronto Raptors, Major League Soccer's Toronto FC, the Toronto Marlies of the AHL and the Air Canada Centre.

Value (in millions US) of major teams under MLSE control, according to most recent studies by Forbes:

Maple Leafs (NHL): $521

Raptors (NBA): $399

Toronto FC (MLS): $44*

*2008 value. All others 2011.

—CBCSports.ca

The heads of both Rogers and Bell declared the deal a victory for sports fans and one that will keep the company in Canadian hands. Both companies own broadcasting properties and are hungry for content to fill devices from living room TV sets to iPhones to computers.

"It will definitely bring fans closer to the action," George Cope, president and CEO of Bell Canada parent BCE Inc. (TSX:BCE), said at a news conference.

"This is a perfect fit for Bell from a strategic perspective" as it dovetails nicely with the company's acquisition last year of the CTV television network and its TSN sports channel, Cope added.

"This investment fits squarely into our strategy of securing premium content and making it accessible to Canadians when, where and how they want it."

Rogers already owns the Toronto Blue Jays baseball team and their stadium, the Rogers Centre, as well as the broadcaster Sportsnet.

"MLSE offers some of the richest, most sought-after content in North America," said Rogers president and chief executive Nadir Mohamed.

"This investment will secure us access to this iconic brand and content It will keep ownership of MLSE in Canadian hands and that's an important point. It will substantially bolster Sportsnet and will complement our existing world-class portfolio of sports properties."

Through his company Kilmer Sports, minority owner Toronto businessman Larry Tanenbaum will increase his current 20 per cent stake in MLSE to 25 per cent.

The surprise deal came a few weeks after Teachers' announced it had given up trying to sell the stake in sports company, which it bought 17 years ago for $180 million. Shortly after that, Bell and Rogers (TSX:RCI.B) stepped forward with a bid that met all of its original terms and conditions, Teachers' said.

"We are proud of this iconic company, in which we first invested in 1994," Jane Rowe, senior vice-president of Teachers' Private Capital said in a statement.

"It is second to none in the industry and has a very bright future. We believe that Bell and Rogers, with their MLSE partner Kilmer Sports, will deliver on the company's potential."

"We will continue to cheer for the teams and look forward to celebrating their success, but after the summer, from the sidelines," she added later at a news conference.

Tanenbaum will remain as chairman of MLSE and as a governor of the NHL, the NBA and Major League Soccer.

"I am proud this is a made-in-Canada deal that will bring resources and expertise to help us win on and off the ice, court and pitch," Tanenbaum said.

"This is a terrific path forward for our teams and our fans. It will ensure MLSE continues to make a positive impact in Toronto and across this great country of ours."

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Europe's debt crisis a risk here, Bank of Canada warns

Global financial conditions stemming from the debt crisis in Europe are deteriorating rapidly, placing Canada's economy under greater stress and Canadians with large debts at greater risk, warns the Bank of Canada.

The central bank's semi-annual financial stability review says bluntly that Canadians need to start worrying about the worsening debt mess in Europe, and its ability to hit home hard.

"Since June, the global retrenchment of risk associated with the European crisis has indeed resulted in a significant correction in the prices of equities and other risky assets, as well as a widening of credit spreads in Canada," the bank states.

"Should the crisis deepen and spread further to the larger European economies, transmission to Canada could become more severe ... An adverse outcome for Europe would also raise the risk of a significant impairment of funding conditions for Canadian institutions."

The report notes that the Canadian banking sector's direct exposure to the debt problems in Europe are limited, ranging from virtually zero per cent of the capital they hold in the case of Greece and Portugal, to a high of 3.4 per cent with respect to Italy.

But the analysis adds that the spillover effects on the global economy touches almost every aspect of Canada's economic and financial system, from trade, to the financial system to consumer and business confidence.

"The (bank's) governing council judges that the risks to the stability of Canada's financial system are high and have increased markedly over the past six months," the review states.

A major area of concern for the bank is the high level of indebtedness of Canadian households that have taken advantage of the low interest rate environment of the past several years to buy homes, cars and other items on credit.

The bank says while credit growth has slowed recently, it worries that it continues to rise faster than incomes despite persistent admonitions from policy-makers that one day interest rates will rise, and monthly payments to service debt will increase.

Although household debt-to-income is now at a record 149 per cent, higher than even in the United States, the bank fully expects that ratio to increase further.

That leaves Canadian households vulnerable to a shock, such as a sharp rise in unemployment caused by an economic slowdown or a significant decline in house prices, which would sap household wealth.

The bank regards the situation serious enough that it advises the government to "continuously assess the risks arising from the financial situation of the household sector."

Recently, the International Monetary Fund said Ottawa may need to again revisit eligibility rules for obtaining mortgages, even though the federal government have tightened conditions three times in as many years.

The bank doesn't go that far, but notes that after March — the last time mortgage requirements were stiffened — mortgage credit slowed, but has since picked up.

The bank also cautions that low interest rates and the weak performance of markets is putting the squeeze on pension plans, which are at a higher risk of being unable to meet their financial obligations.

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FAQ on Europe's 'fiscal union'

All European Union states except Britain moved toward setting up a new treaty Friday, giving up crucial powers over their own budgets in an attempt to overcome a crippling debt crisis.

All 17 countries that use the euro are definitely signing up. Nine non-euro states — Denmark, Latvia, Lithuania, Poland, Romania, Bulgaria, Hungary, Sweden and the Czech Republic — said they would consult their parliaments before joining in. In some of those countries, however, parliaments are less than enthusiastic.

The U.K. gave a clear "no" after it failed to get the eurozone to approve special safeguards for its financial center from EU regulation.

For the past two years, the countries that share the euro have been rocked by a debt crisis that has recently threatened the survival of the currency. Germany and France in particular argued that only tough rules enshrined in a treaty would convince markets that all countries will be able to repay their debts and a similar crisis will never happen again.

Debt brakes in national constitutions. All 23 countries commit to keep their deficits below 0.5 per cent of economic output. That cap can be broken to counteract a recession or in other exceptional circumstances. The European Court of Justice will make sure all states' debt brakes are effective.

More automatic penalties for deficit sinners. In the past, governments often protected their partners from being punished.

All states have to tell their partners in advance how much debt they plan to take on through bond sales.

The eurozone, together with other willing EU states, will give as much as 200 billion euros to the International Monetary Fund to help it rescue troubled nations.

The eurozone's permanent bailout fund, the European Stability Mechanism, will take over from the current rescue fund, the European Financial Stability Facility, one year ahead of schedule, in July 2012. Unlike the EFSF, the ESM has paid-in capital, similar to a bank, and is therefore more credible on financial markets.

The ESM's decision-making process was simplified in emergency situations, allowing struggling countries to get financial help if an 85 per cent majority of capital holders agree. That is meant to stop small countries from blocking or slowing down urgent rescues, as has happened in the past.

The eurozone eased rules that have forced banks and other private investors to take losses when a country gets a bailout from the ESM. The previous push to inflict losses on bondholders has been blamed for exacerbating the crisis.

Eurozone leaders did not decide to boost the overall firepower of their own bailout funds, which is currently limited to 500 billion euros. They promised to reconsider that cap in March, shortly before the ESM comes into force.

They did not agree to more intrusive powers for the European Commission over the fiscal policies of wayward states, as had been demanded by European Council President Herman Van Rompuy and some nations. Instead, they promised to "examine swiftly" much more lenient proposals from the Commission.

They did not allow the bailout funds to directly recapitalize failing banks. That could have prevented countries from taking on more debt when they have to bail out lenders.

Stock markets and the euro rose modestly in reaction to the deal, but many details remain to be worked out. Much will depend on whether the stricter fiscal rules can persuade the ECB to unleash massive funds to buy up bad eurozone debt.

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Encana questions fracking findings in U.S.

The U.S. Environmental Protection Agency may have linked fracking — a controversial method of improving the productivity of oil and gas wells — to groundwater pollution for the first time.

An Encana warning sign on a farm field gate in Pouce Coupe, B.C. Betsy Trumpener and Robert Doane/CBC

The EPA announced Thursday that it found compounds likely associated with fracking chemicals in the groundwater beneath Pavillion, a Wyoming community where residents say their well water reeks of chemicals.

The EPA said its announcement is the first step in a process of opening up its findings for review by the public and other scientists.

"EPA's highest priority remains ensuring that Pavillion residents have access to safe drinking water," said Jim Martin, EPA regional administrator in Denver. "We look forward to having these findings in the draft report informed by a transparent and public review process."

The EPA also emphasized that the findings are specific to the Pavillion area. The agency said the fracking that occurred in Pavillion differed from fracking methods used elsewhere in regions with different geological characteristics.

The fracking occurred below the level of the drinking water aquifer and close to water wells, the EPA said. Elsewhere, drilling is more remote and fracking occurs much deeper than the level of groundwater that would normally be used.

Calgary-based Encana owns the Pavillion gas field. An announced $45-million US sale to Midland, Texas-based Legacy Reserves fell through last month amid what Encana said were Legacy's concerns about the EPA investigation.

Encana spokesman Doug Hock said there was much to question about the draft study. The compounds EPA said could be associated with fracking, he said, could have had other origins not related to gas development.

"Those could just have likely been brought about by contamination in their sampling process or construction of their well," Hock said.

The low levels of hydrocarbons found in local water wells likewise haven't been linked to gas development and substances such as methane are naturally occurring in the area.

"There are still a lot of questions that need to be answered. This is a probability and it is one we believe is incorrect," Hock said.

In a statement on its website, Encana says it remains committed to seeing that the investigations into determining the source of the compounds found in the Pavillion groundwater are backed by sound science that is reviewed by independent peers.

But environmentalists welcomed the news of the EPA report, calling it an important turning point in the fracking debate.

'Those of us who suffer the impacts from the unchecked development in our community are extremely happy the contamination source is being identified.'— Pavillion resident John Fenton

"This is an important first indication there are potential problems with fracking that can impact domestic water wells. It's, I think, a clarion call to industry to make sure they take a great deal of care in their drilling practices," said Steve Jones of the Wyoming Outdoor Council.

Pavillion resident John Fenton, chairman of the group Pavillion Area Concerned Citizens, applauded the EPA for listening to the homeowners with contaminated water.

"Those of us who suffer the impacts from the unchecked development in our community are extremely happy the contamination source is being identified," Fenton said.

The finding could have a chilling effect in both Canada and the U.S. where various levels of government are trying to determine how to regulate the controversial process. Hydraulic fracturing involves pumping pressurized water, sand and chemicals underground to open fissures and release natural gas and oil trapped in the rock formations.

The industry has long contended that fracking is safe, but environmentalists and some residents who live near drilling sites say it can poison groundwater and release toxic gas into the air.

As part of the investigation, the EPA drilled two deep monitoring wells in the local aquifer and found synthetic chemicals, like glycols and alcohols consistent with gas production and hydraulic fracturing fluids. It also found benzene concentrations well above Safe Drinking Water Act standards and high methane levels in the deep wells.

The EPA also sampled drinking water from area wells and found chemicals consistent with migrations from areas of gas production in the drinking water, but still below established health and safety levels. Nevertheless, health officials advised residents not to drink their water or use it for cooking.

"Given the area’s complex geology and the proximity of drinking water wells to ground water contamination, EPA is concerned about the movement of contaminants within the aquifer and the safety of drinking water wells over time," said the draft report on the investigation released on Thursday.

The EPA announcement has major implications for a vast increase in gas drilling across North America in recent years.

Fracking has played a large role in opening up many Canadian natural gas reserves, but questions have been raised about the practice from northern British Columbia to New Brunswick.

"The public is more involved than ever in trying to understand what's going on with resource development, and we have to do a better job of explaining what's going on underneath the ground, what the resource looks like and how we operate," said Travis Davies, who is with the Canadian Association of Petroleum Producers. With files from The Associated Press

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Push for climate deal hinges on U.S., China

The United States, China and India could scuttle attempts to save the only treaty governing global warming, Europe's top negotiator said Friday hours before a 194-nation U.N. climate conference was to close.

After two weeks of negotiations, talks went through the night Thursday with delegates struggling to keep Durban from becoming the graveyard of the 1997 Kyoto Protocol on global warming.

"If there is no further movement from what I have seen until 4 o'clock this morning, then I must say I don't think that there will be a deal in Durban," said Connie Hedegaard, the European commissioner for climate action.

The proposed package would see the European Union extend its commitments to reduce greenhouse gas emissions under the 1997 Kyoto Protocol, but only if all other countries agree to negotiate a new treaty with legally binding obligations for everyone, not just the wealthy Kyoto group.

The EU has said it will not renew its emissions reduction pledges, which expire in one year, without agreement to begin work on a treaty to replace the Kyoto accord that would compel all countries to control their emissions, including the United States and China, which are the world's two largest polluters. The U.S. never ratified the protocol, though it has made voluntary efforts to reduce emissions.

The Europeans won critical support late Thursday from an alliance of small islands and the world's poorest countries — about 120 nations altogether — for its proposal to start negotiations now on a deal to take effect in 2018 or possibly after 2020. Brazil and South Africa also said they would accept binding emissions limits under a new agreement. The two countries are among the countries in the so-called developing world that emit the most greenhouse gases.

Ministers or senior negotiators from 28 countries then worked late through the night to try to bring the U.S., China and India on board.

Hedegaard said the three countries are still not on board and could scuttle the deal.

A man dressed as a tree holds a fake U.S. dollar note as he protests during a climate change conference in Durban, Dec. 8. Schalk van Zuydam/AP Photo Both China and the U.S. have said they would be amenable to the EU proposal to negotiate a post-2020 agreement, but each attached riders that appeared to hobble prospects for unanimous acceptance.

Canada has said it is prepared to sign a comprehensive treaty as early as 2015 but will not be part of any extension of the Kyoto approach to cutting carbon emissions.

The United States, whose Congress is generally seen as hostile on the climate issue, is concerned about conceding any competitive business advantage to China. Beijing, too, is resisting the notion that it has become a developed country on par with the U.S. or Europe, saying it still has hundreds of millions of impoverished people.

Rich countries are legally bound to reduce carbon emissions while developing countries take voluntary actions.

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$9B Joslyn oilsands project gets green light

Minister of Natural Resources Joe Oliver says Alberta's Joslyn North mine project has been approved. Sean Kilpatrick/Canadian Press

Natural Resources Minister Joe Oliver says Canada's environmental review process takes too long and it should be streamlined so it doesn't last any longer than two years.

Oliver made the statement in announcing federal approval for French oil giant Total's Joslyn North oilsands mine project 65 kilometres northwest of Fort McMurray, Alta.

"I think the regulatory process should be completed within a reasonable amount of time and that time should be a couple of years," said Oliver.

It took six years for Total to get environmental approval for the project, which faced opposition from environmental groups. Oliver said that was unacceptable, but didn't offer specific suggestions on how to shorten the process.

Oliver told reporters the mine could bring as much as $9 billion in new investment in Canada. Total says the project will create thousands of jobs.

The opposition wasn't impressed with Oliver's statements about the environmental assessment process.

"You can wave a wand and say you are going to drop it from six [years] to four to two. Well, why not one? Why not not have it? Why not six months? If you think you know what the predestined outcome of the process is going to be, then why have the process?" asked MP David McGuinty, the Liberals' natural resources critic.

The Joslyn project is slated to be up and running at full production by 2017.

At full capacity, it will produce 100,000 barrels of bitumen a day. Total estimates are that the mine will yield more than 874 million barrels over its 20-year lifespan.

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Dollar falls on Europe worries

The Canadian dollar fell by more than a cent Thursday on disappointment that the European Central Bank has no plans for large-scale government bond purchases, to help drive down the borrowing costs of deeply-indebted eurozone members.

The loonie closed down 1.19 cents at 97.79 cents US.

Markets also dropped ahead of a crucial summit of European Union leaders in Brussels Friday which is aiming to find a convincing solution to the European debt crisis.

The S&P/TSX composite index tumbled 196.94 points, or 1.6 per cent, to 11,951.79.

In New York, the Dow Jones industrials were off 198.67 points, or 1.63 per cent, at 11,997.70, the Nasdaq composite index dropping 52.83 points, or 1.99 per cent, t0 2,596.38 and the S&P 500 index stepping back 26.66 points, or 2.11 per cent, at 1,234.35.

"People are very nervous that Europe will yet again fail to adequately address the sovereign debt crisis," says David Kelly, chief market strategist for JP Morgan Funds in New York.

S&P/TSX 3-month chart

Traders had been hoping for a bond-purchase program, but the ECB has been vocal in maintaining it does not want to be seen as the lender of last resort.

"The ECB doesn't want to fall into the trap where they are just always expected to come to the rescue," said Gareth Watson, vice-president investment management and research at Richardson GMP Ltd.

"This is just kind of tough love and unfortunately tough love does not work out so well in the marketplace."

The January crude contract on the New York Mercantile Exchange closed down $2.15 to $98.34 US a barrel and February gold dropped $31.40 to $1,713.40 US an ounce.

European bourses also shed early gains with London's FTSE 100 closing down 1.14 per cent, Frankfurt's DAX declining two per cent and the Paris CAC 40 dropping 2.53 per cent.

With files from The Canadian Press

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Canada swings to $885M trade deficit

Merchandise exports declined three per cent and imports rose 1.9 in October, as Canada's trade balance slipped back into deficit.

Statistics Canada reports the country's trade balance with the world fell into a deficit of $885 million in October from a surplus of $1 billion in September.

The agency says exports decreased to $38.4 billion in October, as both prices and volumes fell.

Industrial goods and materials, and energy products sectors led the decline, while automotive products was the only sector to record a gain during the month.

Imports reached a record high of $39.3 billion, as volumes increased 1.3 per cent, led by machinery and equipment, followed by energy and automotive products.

Imports from the United States rose three per cent to $24.5 billion, their highest value since October 2008, while exports fell 0.9 per cent to $27.6 billion.

As a result, Canada's trade surplus with the United States narrowed to $3.1 billion in October from $4.1 billion in September.

Exports to countries other than the United States fell 7.9 per cent to $10.8 billion. Imports from countries other than the United States edged up 0.1 per cent to $14.7 billion.

Canada's trade deficit with countries other than the United States increased to $4 billion in October from $3 billion.

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VIDEO: The Wealthy Barber Returns

Bestselling author David Chilton says Canadians aren't well-served by exorbitant mutual fund fees, an epidemic in the industry that he says eat into returns over time.

In an interview on the CBC's Lang & O'Leary Exchange, he told CBC's Amanda Lang that the fees mutual fund companies charge Canadian investors to manage their money "are high by any common sense standard".

While fund managers get paid in a variety of ways, one of the most common is what's known as the Management Expense Ratio, or MER. That's the percentage of the fund's assets that goes to the fund manager, before any returns are given to unitholders.

A recent study by fund monitoring company Morningstar found that Canadian mutual funds have a median MER of 2.31 per cent. That's higher than those in most developed economies, including the U.S., where funds have a median MER of 0.94 per cent.

Industry advocates say that's a misleading comparison for many reasons, since the fund industry is a competitive marketplace and investors get all sorts of value-added management for their money. But in the interview, Chilton rejected those claims.

"There's pressure on the industry now to bring fees down and probably that's a good thing," Chilton said.

CBC business commentator Kevin O'Leary says Canadian funds are sometimes higher because of the nature of Canada's investment market. U.S. funds enjoy economies of scale from being larger.

But Chilton disputes that notion. "There's not a lot more work managing $2 billion as opposed to $200 million," he said.

(In the interest of full disclosure, O'Leary is chairman of O'Leary funds, a Toronto-based money manager.)

Chilton says there's no good reason for a Canadian equity fund to charge in excess of two or more per cent to buy widely available large-cap dividend-paying stocks. "That's nutty," Chilton said. "and … I don't meet anybody in the industry who denies that's nutty," he said.

Those costs can add up. Assuming an average five per cent annual return, $10,000 invested over 45 years in a fund that charges 0.5 per cent will mean $17,783 to the fund manager, while the investor gets $72,066. But if that management fee jumps to 2.5 per cent, the investor ends up making less than half what his professional help does, with $60,356 going to the manager and $29,493 going to the investor.

Chilton also expressed concern with some of the new Exchange Traded Funds coming to market. ETFs made a big splash when they came to Canada in the 1990s by allowing investors to cut fees by indexing major stock markets and get in and out of the funds easily, because they trade on stock exchanges themselves.

"The initial version of ETFs, broad baskets of securities to match major markets at a low cost, [they're] tough to argue with," Chilton said. "But I'm a little concerned about some of the new entries into the field."

That's because new ETFs are becoming niche products, getting involved in illiquid investments, with more and more derivatives underlying them — not simply baskets of common stocks as they were originally. That opens them up to all sorts of counterparty risks and has also caused fees to inch higher.

Click here to see the complete David Chilton interview, or watch the player above.

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China's economy slows

New figures show China's industrial production slowed to its slowest pace in two years in November.

The country’s National Bureau of Statistics Friday reported that industrial output rose 12.4 per cent.

In another sign that the world’s second largest economy is losing momentum, the government reported inflation cooled to 4.2 per cent last month from 5.5 per cent in October.

Still, the official Xinhua News Agency reported that the Communist Party's powerful Politburo agreed during its meeting Friday to keep to a "prudent" monetary policy.

That’s a catch phrase for keeping a lid on inflation.

Leaders were widely expected to remain cautious about stimulating growth given an upcoming leadership transition next year, the uncertain global situation and concerns over the potential for inflation to rebound.

China has experienced a surge in labour unrest recently and public dissatisfaction over the widening gap between rich and poor, corruption, pollution and other issues have added to jitters as the party prepares for a transition next year to a new generation of leadership.

Moves toward an easier monetary stance may come as early as next week at an annual economic work conference in Beijing next week that will set policy for the coming year could spell out measures to encourage growth, but China must try to balance that with the concern that too much stimulus could touch off another round of excess investment and inflation.

Escalating price increases remain a risk, given retail sales rose by 17.3 per cent in November compared with the same month a year earlier. That was up slightly from October.

China's latest bout of inflation was fuelled by a stimulus-led binge in bank lending in 2009 that helped fend off the global crisis. Much of it was squandered in excessive investments in construction and real estate.

China's economy has been slowing for most of the year, with growth expected to drop below nine per cent in 2012. GDP growth in the quarter that ended in September was 9.1 per cent.

With files from The Associated Press

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Canadian firms planned to spend more on R&D in 2011

Businesses in Canada planned to spend $15.6 billion on industrial research and development in 2011. That is five per cent higher than the $14.9 billion they planned to spend in 2010. iStock

Research and development spending by industry is expected to increase in 2011 — the first time in four years that has happened in Canada.

"The 2011 industrial R&D spending intentions suggest that recovery is underway after three consecutive years of declining R&D spending that occurred across almost all industrial sectors," said a Statistics Canada report Friday.

Businesses in Canada planned to spend $15.6 billion on industrial research and development in 2011. That is five per cent higher than the $14.9 billion they had planned to spend in 2010, but still below the $16.8 billion they spent in 2007.

The communications sector showed the biggest relative increase, at 21.4 per cent, followed by aerospace at 8.2 per cent.

Each of those industries planned to spend $1.4 billion this year. Scientific research and development services planned to spend the largest amount, at $1.7 billion, but that was an increase of 1.1 per cent compared to 2010.

In addition to planned spending in recent years, the Statistics Canada report also looked at actual spending for years where data was available.

It found that industrial R & D activities provided the equivalent of 149,900 full-time jobs across the country in 2009, down 11.8 per cent from 2008.

The companies themselves provided 79 per cent of the funding for their research and development activities. However, 13 per cent came from foreign sources, two per cent came from the federal government, and the rest came from other Canadian sources such as provincial governments and contracts with other firms.

Over the longer term, the number of companies performing research and development has increased from 9,648 in 1997 to 24,203 in 2008.

Nevertheless, Canada's R & D spending-to-GDP ratio "continues to lag the average for all OECD member countries" and has fallen from 1.3 in 2001 to 1.0 in 2009, the same level it had in 2004, the report said. Meanwhile, the U.S. ratio increased to 2.0 in 2008 from 1.7 in 1994.

The countries with the highest relative R & D spending were Israel and Finland, which had ratios of 3.4 and 2.8 respectively. In 2009, the most recent year for which provincial data was available, Ontario and Quebec accounted for more than 75 per cent of industrial R & D spending across the country.

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Shuttered US auto plants being reused, report finds

A woman walks next to the abandoned Packard Motor Car Company building, that ceased production in the 1950's, in Detroit, Michigan December 18, 2008. Rebecca Cook/Reuters

A new report finds about half of all U.S. automotive plants that have closed since 1979 are being reused, with much of that activity coming in the past few years.

The Ann Arbor, Mich.-based nonprofit Center for Automotive Research's report released Thursday finds that of the 267 assembly and parts plants closed during that period, 128 have found or are finding new life.

Forty percent of the sites surveyed were bought for a new use between 2008 and 2010, during which General Motors and Chrysler went through restructuring and bankruptcy reorganization.

An Associated Press analysis released in January 2010 found that of 128 major manufacturing plants in North America closed since 1980 by the Detroit Three and their largest suppliers, three of every five sat idle.

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Toyota cuts earnings forecast 54%

Toyota Motor Corp. has lowered its forecast for annual earnings, and is on track to lose its place as the world’s largest automaker.

The firm said Friday it expects to finish the fiscal year ending in March with a net profit of $2.3 billion Cdn, down 54 per cent from the target it projected in August.

It blamed a strong yen and massive flooding in Thailand for the sharp downgrade.

Japan's biggest automaker fell to number three in global rankings for vehicle sales during the first six months, trailing General Motors and Volkswagen.

It cut its estimate for worldwide sales to 7.38 million from the 7.6 million it predicted four months ago.

Japanese car makers were first hit with the earthquake and tsunami in March and their suppliers in Thailand were hit by the worst flooding in half a century this autumn.

The flooding will cut output by 230,000 vehicles, Toyota executive vice president Satoshi Ozawa said.

But among Japan's car makers, Honda Motor Co. has been the worst hit by the floods. It has yet to release forecasts as a result.

Compounding the pain is a strong yen, which hit multiple historic highs against the dollar this year.

With jitters about European and U.S. economies, global investors have turned to the yen as a relative safe haven.

For exporters like Toyota, a strong yen reduces the value of overseas profits when repatriated and makes Japanese products less competitive on prices in markets outside Japan.

With files from The Associated Press

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Britain leads push against new Europe deal

The European Union's president said Friday that 26 of its 27 member countries are open to joining a new treaty tying their finances together to solve the euro crisis. Only Britain remains opposed, creating a deep rift in the union.

In marathon overnight talks, the 17 countries that use the euro gradually persuaded the others to consider joining the new treaty they would create. Some of those countries may face parliamentary opposition to the treaty, which would allow for unprecedented oversight of national budgets.

"Except for one, all are considering participation," EU President Herman Van Rompuy told reporters.

A document released near the end of a high-stakes EU summit Friday said the leaders of nine of the 10 EU countries that don't use the euro "indicated the possibility to take part in this process after consulting their parliaments where appropriate."

In drafting a new treaty, the countries hope to help European nations struggling with giant debts over the long term, and in that sense there were early indications of success. Such an agreement is considered necessary before the European Central Bank and other institutions commit more money to lowering the borrowing costs of heavily indebted countries like Italy and Spain.

"It's a very good outcome for the euro area, very good," ECB President Mario Draghi said in Brussels. "It is going to be the basis for much more disciplined economic policy for euro-area members. And certainly it is going to be helpful in the present situation."

Stocks and the euro climbed on the news of the new treaty, even though it offers only a long-term solution and no immediate salve for a crisis that started in Greece, then plunged the whole eurozone into crisis and now threatens the global economy.

While the deal could help save the euro, the political implications of the rift could be enormous. Germany and France had hoped to persuade all 27 EU countries to agree to change the treaty that governs their union. But Britain, which doesn't use the euro, firmly said no.

Britain's leaders argued that the revised treaty would threaten their national sovereignty and damage London's esteemed financial services industry. Germany and France, the eurozone's biggest economies, made clear that a deal among the 17 euro countries and whoever else wanted to join was better than nothing.

Hungary, the Czech Republic and Sweden said they would need to consult their parliaments, while the other six countries outside the eurozone — Denmark, Poland, Bulgaria, Romania, Latvia, Lithuania — agreed they wanted to join.

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BCE hikes dividend 5%

Three-month stock chart for BCE Inc. The company raised its dividend Thursday. CBC

BCE Inc. is raising its dividend by five per cent and using surplus cash to bolster its balance sheet as the telecom giant predicts strong growth ahead.

The Montreal-based telecommunications company and parent company of Bell Canada, said Thursday it will boost its annual dividend by five per cent to $2.17 per share for 2012. It's the seventh increase in the past three years, and payouts will begin in BCE's first-quarter payout, on April 15 next year.

"This reflects our confidence in delivering on our business plan, based on the Bell team's strong execution of our strategic imperatives and reinforced by a healthy balance sheet with ample liquidity," president and CEO George Cope said in a statement.

"We have the financial flexibility to reward shareholders, while supporting significant ongoing capital investment in Bell's broadband networks and services."

In addition to the dividend hike, the company will also buy back as much as $250 million worth of its own stock in a move designed to increase its share price and it plans to make a voluntary $750 million voluntary payment on its defined benefit pension plan.

Because it is tax deductible, the pension payment will provide BCE with about a $170-million boost to its free cash flow. It will also add an estimated three cents to adjusted earnings per share next year as it reduces expenses booked against earnings.

"The new share buyback program and voluntary pension contribution represent a well-balanced use of surplus cash," said chief financial officer Siim Vanaselja.

"In a financial climate of declining interest rates and weak equity returns, accelerating the cash funding of Bell's future pension obligation to preserve a strong solvency position in the pension plan is a prudent action."

BCE said Bell Canada's expected revenue growth will remain unchanged from prior guidance at between nine and 11 per cent, while the parent company's adjusted earnings per share should rise to a range between $3.10 and $3.15 from earlier guidance of $2.95 to $3.05.

UBS analyst Phillip Huang said BCE is continuing its "annual tradition" of raising its dividend.

"We believe the dividend increase and special pension contribution announcements are largely expected, but the buyback is a positive surprise," Huang wrote in a research note.

Huang called the special pension contribution financially attractive for BCE.

"Obviously, the voluntary funding will also reduce future pension funding and expense in the longer term."

But he said he considers the increased dividend of $2.17 at the low end of BCE's payout policy.

Huang said he expects earnings per share in fiscal 2012 to remain unchanged at his estimate of $3.25.

BCE is Canada's largest communications company, and a longtime staple in investment portfolios designed to profit from steady growth companies with a solidly dependable dividend. Aside from wireless and landline telephone services, broadband Internet and satellite TV, it also owns a stable of media properties including the CTV television network.

Shares in BCE were up 25 cents to $40.43 in morning trading on the Toronto Stock Exchange.

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Flaherty wants Europe to solve its own debt crisis

Finance Minister Jim Flaherty says Europe should use its own resources to resolve its debt crisis before other countries contribute.

His comment during a visit to Beijing adds to the pressure on European leaders to produce a financial rescue plan and resources to support it.

China, South Africa and others have said they might consider contributing but need to first see a detailed plan.

Flaherty said they want to see Europe build a "very strong firewall" to protect their banks and prevent debt contagion from spreading.

Chinese officials have said Beijing might consider putting money into a fund to help stabilize Europe by buying government bonds with money from outside investors but wants to see details before it can decide.

Flaherty said he discussed the issue with Chinese officials in Beijing and at a meeting of Asia-Pacific finance ministers this month, but declined to say what the officials said about China's current position.

"Generally, I think the view is that we first need to see that very substantial commitment and action by the Europeans -- and I'm talking about the members of the euro zone -- before any more would be asked of non-European G-20 countries," said Flaherty.

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EMI sold to Vivendi and Sony in $4.1B deals

EMI Group Ltd., home of The Beatles and Coldplay, has been sold in two parts for $4.1 billion

Vivendi SA's Universal Music Group said Friday that it has agreed to buy the recording division of EMI for $1.9 billion.

The second part, the publishing division in charge of songwriting copyrights, was sold to Sony/ATV, for $2.2 billion. That's according to a person familiar with the matter.

A second person says the deal leaves Citigroup, EMI's owner, with liability for a pension plan worth about $600 million.

Both people were not authorized to speak publicly and spoke on condition of anonymity.

Citigroup had put the iconic British music company up for sale after foreclosing on private equity firm Terra Firma in February.

Terra Firma bought EMI in 2007 in a $6.8 billion acquisition financed with debt from U.S. bank Citigroup, but it couldn't make enough money to keep up with the terms of its debt.

EMI Group has Canadian operations with a roster of musicians that include Nickelback and Tom Cochrane.

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France irked by S&P rating downgrade error

France reacted with outrage after the Standard & Poor's ratings agency accidentally sent out a message saying it was downgrading the country's prized "AAA" credit rating during a tumultuous week in Europe's protracted debt crisis.

The error stood for an hour and a half Thursday before it was retracted by the agency — spooking markets by foreshadowing the event that could sound the death knell for the 17-nation eurozone.

The accident came just as Greece and Italy both were in the process of getting new interim governments led by financial experts to guide them out of the continent's debt crisis. Most European markets were still open at the time, and U.S. financial markets were in full swing.

Despite Standard & Poor's statement saying the original message had gone out to some subscribers because of a technical error and its reaffirmation that France's credit rating remained "AAA" — the highest level — and stable, some damage could not be undone.

The yield, or interest rate that France pays to borrow money for 10 years, has risen 0.32 percentage points since Thursday morning, hitting 3.48 per cent Friday afternoon, the highest rate since May.

In the midst of a crisis where fear drives the markets as much as fact, the error has at the very least reminded investors of France's difficulties. And often the suggestion of something amiss is nearly as bad as having something amiss.

French Finance Minister Francois Baroin did his best to quell fears, calling the error a "rather shocking rumor of information that has no foundation."

"We won't let any negative message go," he said in Lyon in comments published Friday on the La Tribune newspaper website.

The French market regulator immediately opened an investigation into the mistake at Baroin's behest, and the minister also called for a European probe.

While the error may have increased the pressure on French bond yields, they were already rising — because, like many countries, France is struggling with slow growth and high debt piled up during the boom years.

The rise of such yields is at the heart of Europe's debt crisis: The increase of those interest rates in Ireland, Portugal and Greece — because investors considered them increasingly bad risks — eventually forced each of those countries to seek massive international bailouts.

Now Italy is coming under the same pressure. That poses a bigger problem because its economy and debts dwarf the others — Italy's economic output is 17 per cent of the eurozone's compared to a combined 6 per cent for the other three nations. Europe doesn't have enough money to fully bail Italy out.

'I can't remember a situation where an agency released a rating movement in error '—Analyst Gary Jenkins

But a French debt downgrade would be a problem on another order of magnitude. France and Germany's "AAA" credit ratings are the bedrock of Europe's bailout fund. Because the debt of those two countries is considered so safe, the fund pays very favorable interest rates on the bonds it issues.

Some analysts said the accident may have tipped the actual thinking at the ratings agency.

"I can't remember a situation where an agency released a rating movement in error and no doubt there will be many people who believe that there is no smoke without fire and that this cannot have happened unless S&P were preparing the ground for a downgrade," Gary Jenkins, an analyst with Evolution Securities, said Friday.

He hastened to add: "I have no idea if this is the case or if it was just a genuine error."

S&P, however, does not even have France on surveillance — the step that typically comes before a rating is downgraded. Moody's, on the other hand, says it is studying whether to put France's rating on notice.

A downgrade of French debt would also pose a domestic problem: President Nicolas Sarkozy, who is expected to face a re-election battle next spring, has staked his credibility on balancing France's budget by 2016.

Along the way, Sarkozy has laid out yearly targets for reducing France's deficit — each one tied to a growth projection. But those forecasts have repeatedly proved too rosy and his conservative government has already twice this year been forced to introduce extra cuts to stay on target.

It's clear the last thing Sarkozy wants to see is for French borrowing costs to rise as his government fights to clean up its deficits and keep the eurozone united.

On Thursday, the European Commission said it considered France's growth forecast for 2013 too high — and Baroin shot back that Paris has already set aside a reserve fund for that eventuality.

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MF Global fires 1,066 employees

Defunct New York-based global investment bank MF Global Inc. says it is terminating its entire workforce of 1,066 employees.

The company said Friday it is dismissing workers in accordance with a bankruptcy court-mandated liquidation. Between 150 and 200 former employees are being hired to assist with the liquidation and court proceedings.

MF Global declared bankruptcy Oct. 31, after losing money on a number of bad bets on derivatives contracts, precipitated by the European financial crisis.

The company did not immediately return a call seeking comment. It said in a statement that all the employees were notified of their termination Friday.

The company said it is working to vacate its headquarters in New York as soon as possible and will close the facility.

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Alberta premier pitches Keystone in Washington

Alberta Premier Alison Redford is in Washington, trying to convince members of Congress and government officials of the merits of the proposed Keystone XL pipeline.

On Nov. 10, the State Department said it would delay the approval process for the 2,736-kilometre pipeline, proposed by Calgary-based TransCanada Corp to carry 700,000 barrels a day of mostly oilsands crude from Alberta to U.S. refineries on the coast of the Gulf of Mexico.

It's now expected to take until 2013 for a decision on whether it should get the go ahead.

The Department said it wanted to study alternative routes for the $7-billion project that would bypass the environmentally sensitive Sandhills area in Nebraska and avoid crossing over the Ogalla aquifer, which supplies drinking water for 1.5 million people in eight states.

Redford’s meetings in Washington will extend into Tuesday.

Officials in Redford’s office said she will tell lawmakers that the project would help the struggling U.S. recovery.

Ranchers, environmentalists, Hollywood celebrities and politicians have made the project a focus of protest over several months, expressing concern not only about oil spills but also about the slow pace of developing alternatives to fossil fuel-based energy.

Keystone supporters say it will provide a boost to the economy at a critical time and also significantly reduce U.S. dependence on Middle Eastern oil.

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GG urges Canada to ramp up productivity

Canada can't afford to hunker down in the midst of global economic turmoil, Gov. Gen. David Johnston said in an interview just before the start of a 15-day trip to southeast Asia.

He said the future is at stake.

"If we want our children to have lives that are at least equal or better than ours — which has been a great Canadian dream — then we certainly have to do better on innovation and productivity," he said.

Governor General David Johnston takes part in an interview at Rideau Hall in Ottawa on Thursday, November 10, 2011. THE CANADIAN PRESS/Sean Kilpatrick Sean Kilpatrick/Canadian Press

Johnston leaves for Malaysia, Singapore and Vietnam on Saturday. He's looking to learn about Asian competitiveness, tout Canada as a prime destination for foreign investment and immigration and find opportunities for Canadian interests.

"We should broaden our horizons," he said in the library at Rideau Hall, where the walls are lined with award-winning Canadian works.

"We should look at the globe entirely as we think about markets and think about opportunities that Canadian expertise can exploit. And that would be a main purpose of this trip....seeing the world as not just North America, not just our backyard."

Long gone are the days when Canadians could depend simply on natural resources or a low Canadian dollar to make money, Johnston said.

And now, with the International Monetary Fund warning of a "lost decade" due to weakness in the United States and Europe, Canadian business can't look to its traditional markets to pick up the slack, he warned.

"It seems to me it's very important for Canada to be a trading nation with the entire globe. And the Asian area is the fastest-growing part of the globe. So we should be there."

Indeed, his trip to southeast Asia was requested by the Prime Minister's Office and comes just as Stephen Harper and Finance Minister Jim Flaherty are in Hawaii meeting with other Asia-Pacific leaders to discuss trade and economics.

Flaherty will go on to China and Japan, following in the tracks of Natural Resources Minister Joe Oliver, who was there this week.

Their message echoes that of Mark Carney, governor of the Bank of Canada: if Canada is to thrive, businesses need to get off their wallets and move aggressively into markets that are actually growing, especially in Asia.

But that's far easier said than done.

Canada's productivity — a key to being globally competitive —is mediocre at best and needs to pick up speed, Johnston said.

Johnston, who has a long history of promoting innovation in Canada, recently had dinner with Jeff Immelt, the chief executive officer of General Electric Co., a company Johnston says serves as a prime example of how Canadian firms should behave in the face of adversity.

"They've never hunkered down. When it's in recession times, they are looking even more aggressively at world markets, at the clusters of activity where they are operating in and determining how they can be one of the best in the world."

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Harper 'disappointed' by Keystone pipeline delay

Delays on the U.S. side to assess the controversial Keystone XL pipeline proposal are a disappointment, Prime Minister Stephen Harper said, before heading to a meeting with U.S. President Barack Obama at the end of the Asia-Pacific Economic Co-operation summit.

"We have already indicated of course that we are disappointed," Harper told reporters in Hawaii, where the summit was held. "Nonetheless, I remain optimistic that the project will eventually go ahead because it makes eminent sense."

Obama reportedly told Harper that delaying the project until 2013 will ensure all questions are properly addressed, during their meeting Sunday. The prime minister also noted that Obama said a final decision had not been made.

Earlier in the day, Harper said the recent decision to delay construction of the $7-billion pipeline has been met with "extremely negative reaction" in the U.S. because the project is "obviously what's in the best interests of not just of the Canadian economy but also the American economy."

Harper also noted that the delay draws attention to Canada's need to access Asian markets for energy products.

Natural Resources Minister Joe Oliver told CBC News on Sunday the U.S. decision to put the project on hold pending an environmental-impact assessment will cost the Canadian company pushing the project.

Oliver said he expects the study ordered by the U.S. State Department "will be costly for" Calgary-based TransCanada Corp.

TransCanada is seeking to build the Keystone XL pipeline expansion from Hardisty, Alta., across the border to Nebraska, where it would meet up with an existing pipeline. Another new segment would run south to Port Arthur and Houston in Texas from Cushing, Okla.

The project has approval in Canada but is awaiting the go-ahead from U.S. officials. But that won't happen until late next year, at the earliest, following a State Department announcement Thursday that it wants to look into alternative routes for the pipeline's Nebraska portion due to environmental concerns.

"I think that this was disappointing, obviously, and it will be costly for the company. It will mean lost revenue for the province and delayed economic activity for the country," Oliver said.

He said it's unlikely TransCanada will abandon the Keystone XL project, however.

"I think if it’s delayed too long then the project could, you know, fall off. And the economic viability of any project could be undermined by excessive delay. I don’t think that we’re there yet, but this wasn’t helpful."

Environmentalists opposed Keystone XL because under its currently proposed path, it would run through sensitive ecological lands in the American Midwest, where any spill would be devastating.

Other opponents of the project say Canada should refine its oilsands crude domestically — and not effectively ship refining jobs and value-added processing to U.S. facilities in the Gulf of Mexico.

Oliver dismissed the environmental concerns, saying the Keystone XL plan had received an environment impact study in the U.S. and was more of a "local issue in Nebraska as much as anything."

The Keystone XL brouhaha highlights the need for Canada to find more buyers for its petroleum, the natural resources minister said.

"Basically all of our energy exports are currently going to the United States. We have one customer. So it is a major fundamental strategic objective of Canada to diversify our customer base," Oliver said.

"I was in China and Japan and I just got back yesterday. And let me tell you there’s a keen interest in our resources in both those countries. The Japanese are interested in our natural gas, the Chinese in our oil and gas."

Calgary-based pipeline operator Enbridge has plans afoot to build $5.5 billion in pipelines from Alberta to a port in Kitimat, B.C., to ship oil to East Asia.

But that project, called the Northern Gateway, is also hotly contested. It would run through aboriginal land and expose First Nations to possible devastation from any spill, which Enbridge has had several of lately in Michigan, Illinois and the Northwest Territories.

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Italy's PM-designate lays groundwork for overhaul

Italy's premier-designate, economist Mario Monti, talks to reporters at the Quirinale Presidential Palace after meeting with Italian President Giorgio Napolitano in Rome. Pier Paolo Cito/AP

Italy's premier-designate Mario Monti began talks on Monday to create a new government of non-political experts tasked with overhauling an ailing economy to keep market fears over the country from threatening the existence of the euro.

Investors initially cheered Monti's appointment, though concern lingered about the sheer amount of work his new government will have to do to restore faith in the country's battered economy and finances.

After losing all confidence in financial markets, Silvio Berlusconi resigned as premier this weekend, as promised, after both houses of Parliament passed emergency austerity and reform measures with unusual speed.

President Giorgio Napolitano tapped Monti on Sunday to create a government capable of implementing economic reforms aimed at reviving stagnant growth to bring down public debt, stuck near 120 percent of GDP.

Improving market confidence in Italy is crucial to the future of the eurozone as the country would be too expensive to rescue. A default on its $2.6 trillion US in debt would cause massive chaos in financial markets and shake the global economy.

As in Greece, where a new government of technocrats also took over last week, the hope is that administrations of experts not affiliated to parties will be more willing to make the tough but necessary decisions that politicians have so far balked at.

Monti appeared to have the respect of many Italians, eager to see an end to the financial crisis that threatens their own well-being.

"In my opinion he will be better than what we had before, obviously," said Bernardo Albrigo, in the Campo Dei Fiori open-air market in central Rome. "He seems to me to be a person who is serious, normal and with experience."

The next six months will be a tough test of the Italian government's ability to restore credibility in its finances -- some $273 billion US in public debt comes due through the end of April.

On Monday, Italy easily raised $4.1 billion in the sale of five-year bonds, though at a higher cost. Investors demanded an interest rate of 6.29 percent for the bonds, the highest level since 1997, compared with 5.32 percent at a similar auction a month ago.

The auction result highlighted how it will take time to bring Italy's borrowing rates significantly lower after spiking last week well above the 7-percent level that eventually forced three other eurozone countries to need bailouts.

On Monday, the yield on Italy's benchmark 10-year bonds fell as low as 6.28 percent before stabilizing around 6.40 percent -- still uncomfortably high for the country. The yield is indicative of the rate the government would pay if it were to tap financial markets to raise cash.

Monti said Sunday that he would act "with a sense of urgency" to identify ministers in the new government but said he would also take the time necessary to secure a strong team. He will be meeting with various political parties throughout the day to garner support for his mission.

"In a moment of particular difficulty for Italy, in a troubled global and European context, the country must win the challenge to redeem itself," Monti said. "Italy needs to return to being an element of strength and not weakness in the European Union, of which we were founders and in which we need to be protagonists."

Monti must now draw up a cabinet, lay out his priorities, and see if he has enough support in Parliament to govern. Rival political parties offered various degrees of support, including one demand from Berlusconi's party — the largest in Parliament — that his government last only as long enough as it takes to heal Italy's finances and revive the economy.

The 68-year-old economics professor proved his mettle as European competition commissioner in the 1990s. But he'll have to win a confidence vote in Parliament before he can lead the nation.

Despite his resignation, Berlusconi pledged to continue playing a role in Italian politics.

"Berlusconi made his position very clear when he left on Sunday," said James Walston, a political analyst at the American University of Rome. " He sent a video message to Italy saying that he is not finished. So at the moment, he is certainly not retired, he is not the retiring type."

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TMX sets up shop in China

The company that owns the Toronto Stock Exchange has opened an office in Beijing to help it convince more Chinese companies to list on Canada's largest stock exchange.

"We're pleased to continue [our] global expansion by opening an office in this important region," TMX Corp. president Tom Kloet said as the Beijing office was formally opened on Monday. "Opening an office in Beijing underscores our commitment to ensuring that the benefits of the Canadian capital markets are well understood around the world."

More than half of the world's publicly traded mining companies are listed in Toronto, as are more than a third of the world's public oil and gas names. China's booming economy has an insatiable appetite for resources at the moment, so just as Chinese firms are investing heavily in Canadian companies, the stock exchange is hoping more and more Chinese resource companies will want access to Canada's resource-savvy capital markets by listing on the TSX.

Earlier this year, TMX Corp. opened an office in London, England. That move was part of the company's overall objective of furthering its international profile and presence. Access to new European markets and investors was a centrepiece of the proposed merger of TMX Corp and the London Stock Exchange before that deal fell apart.

But setting up shop in China is the TMX's attempt to link up with an economy that's growing a lot faster than the traditional markets in Europe. TMX said in a release that the company's efforts in China will focus primarily on advancing Canada's capital markets and TMX's stock exchanges. The office will also provide the ability to offer enhanced services to new and existing clients in China.

In recent months, Chinese companies have come under increased scrutiny for their accounting practices after several accounting irregularities came to light.

Sino-Forest was once the most valuable forestry firm on the TSX until a report from short seller Muddy Waters alleged the company had misstated its assets. The company is currently under investigation by the OSC and trading in the shares is frozen.

There are already several dozen China-based companies that list on the TSX, but TMX Corp. is eager to see that figure climb even higher.

"The opening of the TSX office in Beijing demonstrates the opportunities that Canadian businesses see to further their relationship with the People's Republic of China," said Finance Minister Jim Flaherty, who was on hand for the opening. "It creates an important bridge between our respective capital markets and brings our market participants closer together."

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Upscale Tim Hortons 'ambience' revamp planned

Canadians may not associate espresso, arm chairs and soft lighting with Tim Hortons, but the upscale fixtures are part of the brand's latest makeover.

Along with the December launch of drinks like lattes and mochas, the chain is also giving some of its stores a facelift that invites customers to linger a little longer.

The redesign includes wireless Internet connections, bench seating, softer lighting, a new floor layout and a more open kitchen that gives customers the "ambience" of watching their food being prepared for them.

"While specialty coffee represents a relatively small part of the overall coffee market, it is a growing segment," executive chairman, president and CEO Paul House said on a conference call with analysts Thursday.

"We believe our entry with such a meaningful and relevant offering will reinforce our continued coffee leadership in Canada." The move is expected to encourage customers to come inside, sit and perhaps spend a little more money, rather than zooming through the drive-thru.

"A baked product is really, in some cases, an impulse buy so if you're looking and you like what you see you're more likely to buy it," House said.

The new interior is also designed to provide a more comfortable restaurant environment as Tims ramps up its food offerings.

Earlier this month, it launched a hot lasagna casserole in several restaurants and House said it plans to offer more "comfort foods." In the U.S. it is testing panini-style grilled sandwiches.

The makeover comes as the chain reports soaring profits and revenues based on the traditional offerings Canadians know and love Tims for — doughnuts, coffee, soups and bagels.

The company earned $103.6 million or 65 cents per diluted share in the third quarter, up from $73.8 million or 42 cents in the same 2010 period.

Revenue totalled $726.9 million, up from $670.5 million.

The average analyst estimate had been for a profit of 64 cents per share, according to data compiled by Thomson Reuters. Same-store sales, a key metric measuring results from stores open at least a year, were up 4.7 per cent in Canada and 6.3 per cent in the United States.

Still, the company remains focused on how to succeed in an intensely competitive Canadian coffee market as it watches competitor McDonalds also remake its image.

Just days after Tims announced it would introduce espresso-based drinks, McDonalds said it would do the same.

Specialty drinks had been a territory traditionally left to the baristas at Starbucks or Second Cup, but Tims new machines allows it to brew up similar beverages, while maintaining the low cost and fast service it's known for.

Its espresso based beverages start at $2, about 40 per cent cheaper than Starbucks.

But House said he isn't afraid of alienating the chain's core customers, those who come for a "double-double" and a doughnut.

The chain is simply reacting to the evolving tastes of Canadian coffee drinkers, he said, adding that Tims has made some decisions considered risky in the past — such as becoming the first Canadian chain to ban smoking in the 1990s.

"Every time we've done it, there's always that concern you're going to turn off your core customers, but so far we've been successful and not done that."

Tims also caters to local market tastes when it considers how to design or renovate stores, he said.

"Some of these new style restaurants will not be the right features for rural markets and so forth, I don't know if they're going to want leather chairs," he said.

"But in the city markets, especially in the downtown areas of Toronto and so forth, that's really what that market expects." During the quarter, the company opened 41 locations in Canada and 23 in the U.S.

The company has also signed a licence agreement with Dubai-based Apparel Group to open up to 120 restaurants in the United Arab Emirates, Qatar, Bahrain, Kuwait and Oman over the next five years.

Shares in the company were up one per cent or 55 cents to $50.09 Thursday on the Toronto Stock Exchange.

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Harper looks to Asian energy markets after Keystone delay

Prime Minister Stephen Harper told U.S. President Barack Obama at the APEC summit on Sunday that Canada will look for new markets in Asia for its oil and gas, now that the Keystone pipeline has been delayed for more than a year.

Harper made Canada's disappointment in the delay clear when the two leaders sat down for almost 30 minutes at the summit in Hawaii.

All of Canada's oil and gas exports currently go south of the border, and Keystone would transport crude from the oilsands to Texas. Now, however, Harper says the U.S. decision has left him no choice.

"I did indicate to him, as I did to the president of China yesterday [Saturday], as our government has indicated, this highlights why Canada must increase its efforts to make sure it can supply its energy outside of the United States and into Asia in particular," Harper said.

To that end, the prime minister will visit China sometime next year. As well, Canada has decided to signal formally that it is interested in joining the Trans-Pacific Partnership, a group of Asian countries that aims to boost trade and lower tariffs in the Asia-Pacific region.

The United States has also discussed joining the TPP.

Previously, there has been resistance to Canada's participation, because of its staunch protection of the dairy, poultry and egg sectors. Harper now says he feels Canada can do both.

"We're constantly in trade talks, but I continue to believe we can advance our interests and at the same time protect our interests in those agricultural sectors," he said.

According to the White House account of the meeting, Obama said he supported the decision to delay TransCanada's Keystone XL project "to ensure that all questions are properly addressed and all the potential impacts are properly understood."

During a bilateral meeting on Saturday, Chinese President Hu Jintao noted with approval Harper's attempts to reach out, and invited him to visit next year.

"You have repeatedly stated that you attach importance to our relationship and that you hope to forge an even closer relationship with China," the Chinese president said. "I appreciate that position."

Harper also signalled that a border security deal with the U.S. is nearing conclusion. He announced that he'll visit Obama in December and the deal will be part of their discussions

The "Beyond the Border" deal was announced with much fanfare nine months ago as a way to continue to secure the borders but not choke off vital trade.

"It will be a very comprehensive package when it is announced," Harper said.

With files from Susan Lunn in Honolulu and The Canadian Press

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Debt's dirty dozen danger signs

If there's one plaintive cry you tend to hear again and again from credit counsellors, it's this: "If only our clients had come to see us sooner."

By the time many people actually ask for help, their debt problems are so huge that their credit ratings are in tatters and some solutions may no longer be an option.

With that in mind, here are a few of the early warning signs that are pretty good indicators that people may be on their way to financial disaster and should seek help. See if any apply to you.

1. You are only able to make the minimum monthly payment on your credit card debt. A corollary of this warning sign: using a cash advance from one card to pay off another. Imagine that you've racked up a $5,000 debt on a card that charges 19.9 per cent annually. No problem, you say … you just need to make a minimum monthly payment of 3.0 per cent of the balance owning — or $150, in this case. But add in another couple of credit cards with high interest rates, and you can see how making even the minimum payment can quickly become a problem. And don't think of it as a debt of $150. You still owe $5,000. And in the early years, those minimum payments are mostly interest. By the way, in this example, paying the minimum will see that debt hang around for more than 20 years!

2. You're delaying utility bill payments. Most people know that if they pay their electricity or water bill a few weeks late, the service won't get cut off immediately. But stalling one creditor to pay another is a classic "I'm in trouble" indicator. And if you can't make your utility payment one month, how likely is that you'll be able to make a double payment next month?

3. You cash in some of your RRSPs before retirement. More and more Canadians are doing this. A Statistics Canada study found that almost a quarter of taxpayers over one nine-year period cashed in some of their RRSPs following events like the loss of a job or the death of a spouse. Raiding RRSPs early is generally not a good idea as it usually results in a big tax hit and robs you of future retirement income.

4. You argue with your spouse about money. Divorce experts say financial difficulties are a leading cause of splitting up. If you're hiding purchases or the extent of your debt from loved ones, or losing sleep at night, these are all warning signs that should not go unheeded.

5. You are constantly using your overdraft protection. Some people have several accounts, all deep into overdraft territory. Besides the high interest rates these accounts charge, if you're managing to not bounce cheques only because of overdraft protection, things will only get worse.

6. You're broke the day after payday. Living paycheque to paycheque is a fact of life for many people. But when the money that's meant to last for the next two weeks has disappeared in 24 hours, that's a crisis that often sends people to payday loan and cash advance companies. They're only too happy to provide you with an advance on your next paycheque in return for huge fees and interest charges. Putting aside part of your paycheque in an emergency account can help you deal with unexpected expenses.

7. You consolidate your debts every other year. Many people pay off their high-interest rate credit card debt by refinancing their home and rolling that debt into their lower-interest rate mortgage. But some can't resist running up their credit card debt again and end up having to arrange another consolidation several years later. That's a strategy that's eventually likely to backfire. "People can't borrow their way out of debt," points out Rob Boulanger, the director of counselling at Credit Counselling Services of Atlantic Canada in Saint John. "They're just repackaging their debt in different form and extending their debt over God knows how many years."

8. Cutting back on essentials. By this, we don't mean cutting out those $4 lattes to save some money. We're talking about cutting back on food or clothing or cutting out one meal entirely in order to make payments to creditors. Boulanger says he sees seniors doing without needed medications or cutting dosages in half so they can pay their other bills. "It's a generational thing," he says. "The older crowd often has a 'pay your bills at all costs' mindset, even if it endangers their own health."

9. You keep applying for more credit. If you're applying for new credit cards, regularly asking for increases in credit limits or are constantly borrowing from friends and family members to make ends meet, then you're regularly spending more than you take home. If something doesn't change, bankruptcy will likely loom.

10. You're charging everyday expenses like groceries and gasoline because you don't have the cash on hand. It's one thing to charge everyday purchases so you can collect more reward points. But if you have to charge it because there's nothing in your wallet or chequing account, the reward points are nothing but a dangerous distraction. If you aren't able to pay off your credit card bill in full each month, this strategy of putting everything on that card will blow up in your face. It's astonishing how fast the "little things" add up.

11. You regularly get past-due notices or get calls from creditors asking for payment. Paying the occasional bill late happens to many of us. But if it happens all the time, or if you regularly bounce cheques, these are serious warning signs. One side note: If you have the money and pay bills late just because you're a procrastinator, arrange for automatic bill payments. Paying bills after their due date — even just a month late — lowers your credit score and can make it more difficult to borrow at preferential rates. It also voids the interest-free grace period.

12. You don't actually know how much money you owe. Most of us, at least at some time, have wondered where all the money goes. Some people, though, have taken that to the extreme. "Some people are subsidizing themselves through credit, and they don't really know it," Boulanger says. "Some don't know they're in trouble. Once their credit maxes out and they can't get any more, only then do they realize they're in trouble."

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U.K. cabinet minister eyes limits on CEO pay

Britain's business minister says he's sympathetic to the Occupy movement and will consider bringing in legislation to curb CEO salaries.

In an interview that aired Sunday, Business Secretary Vince Cable told the BBC that skyrocketing pay for executives against a backdrop of job and benefit cuts for the average worker "causes a lot of public anger and indignation, and we're seeing some of that spill over into protests in recent weeks."

"I have some sympathy with it," Cable continued.

Cable, a Liberal Democratic MP from west London, was his party's point person on economic issues before becoming a minister last year in Britain's coalition government.

He's been campaigning for months to reform executive pay, which has bounded up by 75 per cent over the last two years for senior executives at Britain's top 100 publicly traded companies, according to research by the firm Income Data Services.

Meanwhile, unemployment hit a 17-year high in the United Kingdom last month, while average wages, after accounting for inflation, are falling.

"A small number of people have done extraordinarily well in the crisis, often undeservedly, and large numbers of other people who played no part in causing the crisis have been hurt by it," Cable told the BBC.

He said shareholders at publicly traded companies need to take the reins in curbing excessive pay packages for executives, but the government would step in if necessary.

“If it does require legislation, of course we’ll introduce it,” he said.

A discussion paper Cable published two months ago floated several ideas for keeping top corporate salaries in check, including having employees sit on companies' remuneration committees.

The global Occupy rallies, which began with protests on Wall Street and have inspired international demonstrations, have touched Britain as well. Hundreds of demonstrators have been camping for weeks outside St. Paul's Cathedral in London to denounce corporate excess and seek economic justice.

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Japan returns to 6% growth after earthquake

Japan's economy grew for the first time in four quarters in a comeback from the earthquake and tsunami disaster that already faces multiple global headwinds.

The world's No. 3 economy expanded at an annualized rate of 6 per cent in the July-September period, driven by exports, the Cabinet Office said in a preliminary report Monday.

It was the first growth in four quarters. The result was in line with market forecasts, including Kyodo News agency's projection of 6.2 per cent annualized growth.

"Having something as strong as hoped for is really good news," said Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo. "Basically all parts of the economy were expanding. And this is extremely important because we see a slowdown internationally, which is already hitting exports."

While such a robust rebound is encouraging, it is unlikely to last.

"The situation surrounding our country's economy is becoming tougher as we see the recovery in overseas economies weakening and face the impact of the Thai flood, in addition to the yen's rapid rise," said economic and fiscal policy minister Motohisa Furukawa, according to Kyodo.

Economists expect GDP — a measure of the value of all goods and services produced domestically — to contract in the last three months of the year before turning moderately positive again next year.

Last week, Japan's lower house of parliament passed a $157 billion US extra budget to help fund recovery efforts in Japan's tsunami-battered northeast. The budget also includes measures aimed at easing pressure from the yen's recent surge.

Considered a safe haven, the Japanese currency has hit record highs against the dollar this year amid intensifying worries about Europe and the U.S. The climb is particularly painful for exporters, whose overseas earnings shrink in value when repatriated.

The new government spending should help offset weaker overseas demand, said Kyohei Morita, chief economist at Barclays Capital in Tokyo.

"We maintain our view that Japan is likely to outpace other advanced economies in 2012," Morita said in a research note Monday.

The International Monetary Fund agrees. It estimates Japan's economy will expand 2.3 per cent next year — the strongest growth forecast among the Group of Seven countries including the U.S., U.K. and Germany.

Japan's latest annualized GDP figure translates to growth of 1.5 per cent from the previous quarter, according to the Cabinet Office.

Consumer spending, which accounts for some 60 per cent of the economy, climbed 1 per cent from the previous quarter.

'Japan is likely to outpace other advanced economies in 2012'—Barclays analyst Kyohei Morita

Capital investment by companies rose 1.1 per cent. Exports jumped 6.2 per cent.

The March 11 earthquake and tsunami killed thousands of people and wiped out large swathes of Japan's northeastern coast. The disasters damaged many factories in the region, causing severe shortages of parts and components for manufacturers across the country, including automakers.

The tsunami also crippled a nuclear power plant that triggered the worst nuclear crisis since Chornobyl.

Since then, the country has steadily fixed its factories and benefited from pent-up demand for Japanese goods such as cars.

Toyota Motor Corp.'s production had recovered to pre-tsunami levels by September, earlier than initial estimates. Output took another big hit due to the recent flooding in Thailand, but the automaker said last week production in Japan would return to near normal levels Nov. 21-25.

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New plastic $100 bills go into circulation

Canadians can get their hands on the country's newest banknotes Monday — $100 bills made from a plastic polymer designed to last longer and thwart counterfeiters.

Bank of Canada governor Mark Carney will be on hand at an afternoon ceremony in Toronto to formally launch the bills.

First announced in June, the bills are a departure from the current cotton-and-paper bills in circulation because they feature the latest in anti-counterfeiting technology.

Counterfeiting became a major problem between 2001 and 2004, when it peaked at 470 fake bills for every one million in circulation. Since then, officials have been able to use new technology to get that figure down to only about 35 fake bills for every one million in circulation today.

To fight that, the new bills have two transparent windows built into them that make them difficult to forge but easy to verify. One extends from the top to the bottom of the bill and has holographic images. Another window is in the shape of a maple leaf.

There is also transparent text, a metallic portrait, raised ink and partially hidden numbers throughout.

The bill commemorates Canadian innovations in the field of medicine and features an updated portrait of onetime Canadian Prime Minister Robert Borden.

The $100 is just the first denomination to be released. A new $50 bill is expected in March, follow by new $20, $10 and $5 versions. All are expected by the end of 2013.

Because they are made of durable polymer, the new bills are expected to last 2.5 times as long as the current ones. That alone could save the government $200 million or more over the life of the series, officials say.

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Spain nationalizes three weak banks

Spain says it has nationalized three troubled banks that failed to meet new capital requirements and says the process of restructuring its financial sector is now complete.

The Bank of Spain identified them Friday as Unnim, CatalunyaCaixa and NovacaixaGalicia.

All three are the result of mergers of smaller savings banks known as cajas, a sector that was heavily exposed to Spain's imploded real estate sector. After capital injections, the government now owns more than 90 per cent of the three banks' shares.

The new core capital requirements were announced by the government in February.

The Spanish central bank says it has spent €7.5 billion ($10.2 billion US) in recapitalizing the three now nationalized banks and in restructuring the wider financial sector.

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Ex Norbourg executives get 8 years for fraud

Two men found guilty in the massive Norbourg fraud scheme have been handed eight-year prison sentences.

Jean Cholette and Serge Beugré were each found guilty of more than 100 counts of fraud last spring.

Cholette worked as a controller at the financial company, and Beugré was its director general.

Superior Court Justice Marc David said in Montreal Friday that an exemplary sentence was necessary and that dissuasion trumped rehabilitation.

David said lengthy prison terms were the only way to send a strong message.

The Crown had sought nine years for Cholette and 10 for Beugré.

The Norbourg fraud is one of the largest in Canadian history, with some 9,200 investors being fleeced out of $115 million.

Vincent Lacroix, the mastermind behind the fraud, was sentenced to 13 years in prison after pleading guilty to about 200 fraud charges.

He was paroled last January after serving one-sixth of his sentence. He is living in a halfway house.

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Anvil Mining soars on takeover bid

Shares in Montreal-based Anvil Mining soared Friday after a $1.3-billion friendly takeover offer from Chinese mining giant Minmetals Resources.

The copper producer’s stock closed at $7.66, up $1.89, or 33 per cent, on the Toronto Stock Exchange. More than 23 million shares traded hands, 50 times the normal volume.

It prices had reached as high as $7.75

The Minmetals bid of $8 is a 38 per cent premium over Thursday’s close.

Anvil’s operations are in the Democratic Republic of Congo.

If there’s a better offer, Minmetals will have the right to match it could receive a break fee of $53 million if the acquisition isn't completed in some circumstances.

Anvil Mining 3-month chart

It has also agreed to pay a $20-million fee to Anvil in certain circumstances, such as a rejection of the deal by Minmetals shareholders.

Minmetals made a $6.04 billion offer Equinox Minerals, a firm focused on copper mining in Zambia, but was beaten out by Toronto-based Barrick Gold Corp. in April.

The deal is the latest in a trend that has seen Chinese companies acquire stakes in oilsands, mining and other resources companies in Canada and around the world.

Earlier Friday, North Atlantic Potash Inc. sold eight of its exploration areas in Saskatchewan to China’s Yancoal Canada Resources for $110 million.

Over the last two years, Chinese companies have bought a 20 per cent stake in Vancouver-based Teck Resources, Canada's largest publicly traded miner. Chinese companies have also helped finance iron ore exploration in northern Quebec and other metals projects in the rest of Canada.

China has been stockpiling minerals, metals, cement, coal and other resources for years to help feed its rapidly growing needs as the world's second-biggest economy expands its network of roads and transit, and builds office buildings and factories.

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Small business outlook positive, but threats loom

It’s been an eventful three years for Canadian small businesses, and while the economy remains bumpy, there are signs that Canada's small business sector is riding it out and gaining strength. But faced with the financial uncertainty of the global markets right now, the big question is whether to hunker down again or invest in growth.

Earlier this year, the federal government designated 2011 the Year of the Entrepreneur. It was as much a way to say thank you to small businesses for their efforts thus far as it was a recognition of the support needed by a key driver of Canada’s economic future.

After Lehman Brothers’ collapse in September 2008, the global economy was thrown into freefall. The domestic economy fared OK, but all-important export markets dried up as manufacturers fearful of making too many new products — and retailers wary of unsellable inventory —cut back on what they bought from Canadian suppliers. Even those lucky enough to have ready and willing customers were hit by a lack of capital, and companies either froze their staffing levels or started painful layoffs.

By late 2009, things were looking up as most of the developed world lurched slowly out of recession, and job numbers recovered. But then came the European debt crisis and America’s debt ceiling debate in early 2011, and the global economy was thrown for another loop. The stock markets took a dive in late September, further spooking consumers and entrepreneurs alike, and some economists are predicting a double-dip global recession — or worse.

In the face of uncertainty like that, what’s the best business strategy for a small business owner these days?

It depends who you ask.

“For the first time in the postwar era,” CIBC economists wrote in a recent report, “Canada’s small businesses outperformed their larger corporate counterparts during the last recession.”

That’s largely because small businesses, for the most part, have deeper roots in the domestic economy than their corporate counterparts. And Canada’s domestic economy fared comparatively better than others did during the slowdown.

In general, the small businesses that did well during the recession were ones that had their financial houses in order going in, had little debt, and were therefore able to benefit from low interest rates.

“The good ones had learned to reduce expenses,” says Jean-Rene Halde, CEO of the Business Development Bank of Canada, the federal government agency mandated to help fund entrepreneurs. “They were relatively lean and mean heading into the recession.”

The businesses that fared best in the recession were the ones who were lean to begin with, Business Development Bank of Canada president and CEO Jean-Rene Halde says. Paul Chiasson/Canadian Press

And anything related to real estate and retailing — two sectors that are closely tied to the vagaries of low rates — have done particularly well for themselves, CIBC notes.

But the latest economic data shows both retail sales and home prices are starting to sour. So even small businesses that have thrived will have to adapt again in order to put in a repeat performance if the economy hits another rough patch.

Mike Michell is the national small business director at Canada’s biggest bank, the Royal Bank of Canada. “There’s no one sector that pops out,” in terms of which businesses will deliver solid performance if the economy slows again, he says.

That means the winners of tomorrow are just as likely to be manufacturer as they are tech startups, he adds. So there’s no silver bullet for success in turbulent economic times — beyond smart planning.

If there is a trend, it’s that the bank’s customers are taking advantage of low rates and investing in their businesses if they can secure loans — an encouraging sign no matter what, Michell says.

'I can’t see Canada having too much leeway to raise [rates] '—CFIB president Catherine Swift

Certainly, interest rates don’t seem like they’ll be rising any time soon.

Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney have been warning Canadians for months that rates have nowhere to go but up. And yet, the rate remains at 1 per cent — the same level it’s been at for more than a year now. Many inside the central bank and at other financial institutions would no doubt dearly love to hike rates, but with anemic growth and serious economic troubles overseas, there’s little they can do.

“The fact that the Fed has said they’re going to hold steady until 2013 at least, I can’t see Canada having too much leeway to raise [rates] either,” says Catherine Swift, the president of the Canadian Federation of Independent Business.

With 108,000 members across the country, the CFIB is the largest organization for Canadian small businesses. In general, its members have a cautiously optimistic view, Swift says.

“The good news is, I always look at employment ahead of any other indicators, and on that front there’s some hope,” Swift adds.

Granted, data showing Canada created essentially no net new jobs in August was disappointing. But in general, Canadian employment is trending in the right direction. Statistics Canada says we’ve added 223,000 new jobs in the past calendar year, and as the current federal government is fond of reminding us, Canada is the only G8 country to have completely replaced all the jobs lost during the recession.

An employee at The Camera Store in Calgary shows a camera to a customer. Retailers have done comparatively well following the recession, but there are signs of a slowdown. Todd Korol/Reuters

“So far what we’re seeing is small businesses hanging on, keeping the people they’ve got, and in some cases ramping up” Swift says. “To me, that’s the good news story.”

Indeed, data from Royal Bank also hints at an upbeat outlook for small business owners. The bank’s latest survey says two-thirds of them are planning to invest in their company over the next two years. A lot of that will take the form of new technology and equipment, but more than 10 per cent of owners said they plan to hire more employees.

“Even in an unsettled economy, most small business owners are investing in their operations,” Michell says. And low interest rates are a driving factor of that, he adds.

The survey polled 1,400 small business owners who deal with the bank, and the results are emblematic of the cautious optimism that pervades at the grass-roots level.

CFIB’s own data shows about 12 per cent of its members say they plan to hire additional full-time staff in the next three or four months. That’s certainly good news, but other CFIB numberse don't paint an entirely rosy picture.

The CFIB’s Business Barometer index dropped to 61.7 in August, down from 68.3 in July. That’s the lowest reading since July 2009 and it indicates small business owners know they’re not out of the woods yet. A reading of above 50 implies respondents expect their businesses will grow, not contract, in the next year. The higher above 50 the number, the more optimism pervades.

'We don’t live on an island and if our big brother is sick, it’s going to affect us too'—BDC president Jean-Rene Halde

A weaker showing is perhaps not expected considering the time frame — entrepreneurs were questioned as the U.S. debt ceiling debate was underway, and Europe’s sovereign debt crisis reached its most recent nadir.

It's not hard to see why businesses aren't bursting with enthusiasm about their prospects for the immediate future.

“Most entrepreneurs cannot connect quantitative easing and European debt to how it will impact their business,” Halde says. “Entrepreneurs are cautiously optimistic about their own firms. But we don’t live on an island and if our big brother is sick, it’s going to affect us too.”

Whether our big brother is on the road to recovery or about to suffer a relapse is anyone's guess at this point.

As the CFIB’s Swift puts it: “Every time things seem to get better, we end up getting whacked again.”

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