Another Merger Monday:

The merger activity in the Canadian mining sector continues as Eurozinc Mining Corp has agreed to merge with Lundin Mining Corp. The merger will create a global base metal producer with operations in Portugal, Sweden and Ireland. The combined company will have a market capitalization of close to $3 billion and will produce 450 million pounds of zinc, 200 million pounds of copper, 175 million pounds of lead and 6 million ounces of silver annually.

This merger is another in a series of mergers in the base metal mining sector and it will not be the last as companies try to grow by acquisition in an effort to remain globally competitive.

This week and next the banking sector will be releasing earnings and it appears that it will be another excellent quarter for the Canadian banks. It is expected that loan growth will be enough to offset a slower investment banking segment. The first to report will be the Bank of Montreal on Tuesday and then the Royal Bank on Friday. The Bank of Nova Scotia, TD Bank and the CIBC will all report next week.

The financial services sector has been a very stabilizing influence on the Canadian market this year as investors have viewed this sector as a safe haven during high volatility. Expect to see more interest in this sector as the commodity markets are likely to remain quite volatile.

Stats Canada will be releasing CPI inflation data Tuesday and the Bank of Canada is expecting that the 1.0% reduction in the Goods and Services tax (GST) that came into effect on July 1st will reduce inflation by 0.5% on both the CPI and Core CPI. The forecast now is for the CPI to decline by 0.3% for July bringing the annual rate down to 2.0%.

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