Pointe-Claire company behind PCBs will 'fully co-operate'

The company accused of storing PCB-laden oil on its Pointe-Claire property says it is willing to submit an action plan for the removal of the chemicals and comply with the Quebec government's demands.

Environment Minister Yves-François Blanchet, said Reliance Power Equipment responded last night and said it was willing to "fully co-operate."

Transformers containing oil with high concentrations of PCBs leaked between 800-1,200 litres of the oily liquid onto the West Island site in March.

Michel Rousseau, deputy environment minister for the Quebec government, told Daybreak Friday morning that some PCBs leeched into nearby Lac St-Louis at that time, but that health authorities deemed the water safe.

The Quebec government and the City of Pointe-Claire gave Reliance until 10:25 a.m. today to reply to their demands and agree to clean up the PCBs it had stored on its West Island property for 15 years.

Despite the company's response, both the mayor of Pointe-Claire and the province's environment minister say they have their doubts, given the weeks of unsuccessful attempts to get Reliance to come forward.

"I accept Reliance's response with reservations. My level of trust, which is based on the behaviour of the company's management over the past years, is very low," Blanchet said.

Pointe-Claire mayor Bill McMurchie echoed that sentiment at a news conference late Friday morning. He said the city's council was "surprised and skeptical" at what it called Reliance's "last-minute position," and said it hoped it wasn't a stalling tactic.

"I think our experience so far would indicate that council's use of the word 'skeptical' is appropriate," McMurchie said.

It could take months to remove the transformers that contain the PCBs and then clean up the contaminated soil, and the environment ministry estimates the work could cost up to $2.5 million.

The company has until Sept. 3 to submit its preliminary action plan to the government.

The plan must outline how the chemicals are to be removed and transferred to a safe storage area, as well how the site will be decontaminated.

In the meantime, fire detectors and extinguishers will be installed to make the site safer. There will also be more security put in place.

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Ottawa turns a $158M surplus in June, but cites timing

The federal government says it posted a small budgetary surplus of $158 million in June, a far stronger fiscal result than last June's $1 billion deficit.

But the Finance Department took care to caution Canadians that the rare black ink does not signal a major turning point in the government's struggle to eliminate the deficit.

It says part of the unexpected strong number stems from monthly timing factors that ballooned the reported deficit in May to $2.4 billion, but made June's bottom line look far stronger.

Revenues increased by a whopping $2.1 billion — or 10.1 per cent — from last year, again reflecting both timing and economic growth.

The government last posted a surplus in February, a month when tax receipts are traditional robust.

For the first three months of the fiscal year combined, Ottawa's overall annual deficit stood at $2.6 billion, only a modestly better than $2.8 billion shortfall it had at this point last year.

In the March budget, Finance Minister Jim Flaherty estimated the year's deficit will fall to $18.7 billion from the $25.9 billion shortfall recorded last year.

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Older iPhones can now be traded in at Apple stores in U.S.

Excited about the new iPhone expected to be unveiled Sept. 10? Apple will now join others in allowing you to trade in your old model.

The company said starting Friday that it would give customers credit for functioning older models at Apple stores in the U.S. The credit can be used toward the purchase of a new iPhone, which will be activated in the store.

It didn't say how much older phones would be worth. But other brokers such as Gazelle.com offer anywhere from $10 for a working iPhone 3G to $350 for an iPhone 5 that is in pristine condition.

Similar trade-in programs are run by retailers, including Best Buy, Target and Radio Shack.

It was not clear Friday when the trade-in program would be avaialble in Canada

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United Steelworkers, Telecom Workers unions to merge

The United Steelworkers and the Telecommunications Workers Union have reached a tentative agreement to merge.

The unions announced Thursday that they will be following in the footsteps of two other large unions that joined forces earlier this summer. The Canadian Auto Workers (CAW) and the Communications, Energy and Paperworkers Union of Canada (CEP) will make their merger official this weekend. The merged union, named Unifor, will be Canada's largest private sector union, with more than 300,000 members.

The Telecommunications Workers Union represents employees at Telus, Shaw Communications and other telecommunications companies. (TWU)

The United Steelworkers union represents 225,000 workers across several industries while the TWU has 13,000 members who work for Shaw Communications, Telus and other telecommunications companies.

The tentative agreement still has to be ratified by the unions' membership but USW international president Leo Gerard says the merger will benefit TWU members.

"Because Telus and other telecommunication companies have operations around the world, our work as a merged union will multiply across borders," Gerard said in a press release. "The TWU will have immediate access to our union's proven capacity to deal with employers on a global basis."

Merger will give TWU 'better bargaining power'

The TWU said a merged union will put its members on firmer footing domestically at a time when Canada's telecommunications industry is in flux.

"This is a merger about better bargaining power, about better service to members and about a strong voice for telecommunication workers when the federal government is making moves like its misguided Verizon scheme," said TWU national president Lee Riggs.

Canada's telecommunications sector has been abuzz recently with talk of a possible entry into the Canadian market by U.S. telecom giant Verizon. The large telecom companies like Telus, Bell and Rogers and the unions representing workers at those companies have all spoken against allowing Verizon to enter the market.

The large telcos have argued that the government's upcoming spectrum auction favours the U.S. company and puts incumbents at a disadvantage while the unions say Verizon's entry into Canada would cost jobs and expose Canadians' data to possible scrutiny by U.S. security agencies — after reports that Verizon co-operated with the National Security Agency in the U.S.

Thousands of CAW and CEP members turned out for a march organized by the unions in Toronto on Friday to urge the government to change the rules over allowing foreign players into the Canadian wireless market.

Union members held up red signs that read "Say no to Verizon", blocking the intersection in front of the Toronto office of Industry Canada.

Ken Lewenza, former head of the Canadian Autoworkers Union, said his first choice would be for the government not to allow foreign companies such as Verizon, into the market.

"But if you are going to allow foreign investors in to a key essential service to the Canadian economy, then it's got to to be under the same rules as the Canadian companies that built the initial programs many years ago. So it's about levelling the playing field," he said.

That's the same message coming from Canada's Big three telco firms —Bell, Rogers and Telus. They're upset that they can't compete in an auction of extra bandwidth space for cellphone providers and have taken out ads saying Ottawa's rules are unfair.

Verizon is four times the size of the big three, and it may not even enter the Canadian market now it is looking at buying back its own stock from Vodafone.

"There's a good reason Bell, Rogers and Telus are nervous. This is a giant looking to come into the Canadian marketplace," Gregory Taylor, a telecom analyst at Ryerson University told CBC News.

But Ottawa is winning the PR game by promising consumers more competition if Verizon enters the market, he said.

"They realize it plays well politically. And so the polls are showing this is working in the governmnent's favour right now. And Canasdians seem to be enjoying watching the big three squirm a little bit."

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40% of top-paid CEOs busted, bailed out or booted, study says

A new report from the Institute for Policy Studies points to a weak link between performance and pay among some of the highest-paid CEOs of American companies, and urges the U.S. government to push through laws that would bring chief executive pay under closer scrutiny.

The report, titled "Executive Excess 2013," found that since the 2008 financial crisis, 40 per cent of the highest-paid CEOs in the U.S. had been either "bailed out, booted, or busted" – that is, worked for companies bailed out by taxpayers, had been fired or had been arrested for illegal activities.

"We think the study really undercuts this whole idea of pay for performance," said Sarah Anderson, co-author of the Executive Excess Report, said in an interview from Washington, D.C.

"We have a corporate culture that really encourages risky behaviour that is dangerous for both shareholders and taxpayers. I think it's widely acknowledged that the executive CEO compensation structure for Wall Street bankers was a factor that got us into this crisis," she told CBC News.

The breakdown:

• About 22 per cent of U.S. companies with the highest-paid CEOs received taxpayer bailouts after the 2008 financial crash.
• Eight per cent of highly paid CEOs were fired for poor performance but received golden parachutes valued, on average, at $48 million US.
• Another eight per cent of highly paid CEOs ran afoul of the law and paid fraud-related fines or settlements.

CEOs paid 354 times more than average American

The left-leaning think tank based in Washington, D.C., examined the records of 241 corporate chief executives over the last 20 years.

It discovered that chief executives of large companies received about 354 times as much pay as the average American worker in 2012. That gap has soared since 1993, when CEOs of big companies received about 195 times as much.

Anderson said the argument that CEOs must be lavishly compensated to ensure good performance just doesn't hold up.

Golden parachutes crazy idea

It makes no sense that CEOs can get a big payout when they are fired for cause, she added, pointing to cases such as former Home Depot CEO Robert Nardelli, who got a $210-million golden parachute.

"The idea that in order to attract top talent they have to offer these pay packages that commit the company to paying these huge golden parachutes, even if the CEO gets fired, seems crazy," Anderson said.

Another idea has been that by giving CEOs stock options and restricted shares, companies are giving them an incentive to take measures to boost stock prices. That's not working either, Anderson said.

"If stocks slump, the companies just unload a whole new boatload of stock options on their top executives and the stock price only has to go up a little bit for them to reap a huge windfall, so it's not aligning the interest of executives and shareholders," she said.

Anderson said companies perform better when the whole workforce is effective and that argues for a smaller gap between CEO and worker pay.

She urged the U.S. government to enact several measures of the Dodd-Frank legislation that was passed in 2010 but whose provisions have yet to be put in place.

Among the rules yet to take effect are:

• Mandatory disclosure of the ratio between CEO and worker pay.
• Restrictions on incentive-based compensation at financial institutions.
• Limiting the deductibility of executive compensation, in order to prevent corporations deducting the cost of executive stock options on their tax bills.

Anderson said a lot of incentive-based compensation of executives at financial institutions encouraged risky behaviour, including making extreme trades and failing to put in safeguards against illegal activity.

"One thing we're trying to do with the report is draw attention to the fact that that law that was signed three years ago by President Obama still has not been implemented in terms of these executive pay reforms," she said.

"The reason for that is a very intense backlash by the corporate lobby groups that don't want to be embarrassed by this information."

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Vancouver airport strike 'chaos' averted

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The strike that would have seen more than 300 workers at Vancouver International Airport walk off the job has been averted, the Public Service Alliance of Canada says.

Shortly after 9:30 p.m. PT Thursday, an agreement was reached in last-minute contract talks between the union and the Vancouver Airport Authority, union spokesman Dave Clark said.

"After a marathon mediation, a tentative agreement was done that's a fair deal for the employer, the YVR airport authority, and a fair deal for the employees," he said.

Clark said details of the agreement will only be released once all union members have a chance to see them.

"This is quite new news, we've been working hard," said Anne Murray, spokeswoman for the Vancouver Airport Authority. "The negotiating team has been working quite hard over the last couple of days, but it has been months of negotiations."

'Chaos' averted

The unionized employees work in areas such as emergency response, international arrivals customer care, passenger loading, runway maintenance and lighting, and administration.

On Tuesday, the union issued a 72-hour strike notice and warned passengers to contact the airport or airlines and plan for delays and other potential disruptions in the event of job action.

Some travellers going through Vancouver International Airport changed their plans and either flew out or arrived Thursday in order to avoid delays or cancellations that a possible strike Friday might cause. (CBC)

The strike notice came just weeks after 83 per cent of the membership of the Union of Canadian Transportation Employees members voted in favour of a strike.

A union spokesman said flexible shifts and protection from contracting were two of the main issues needing renegotiation.

The B.C. Federation of Labour had warned on Wednesday that air travel into or out of Vancouver could be "chaos" Friday morning if a strike did go ahead; however, an airport spokesperson said repeatedly that the airport would be fully operational even if the strike occurred.

With files from The Canadian Press

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General Electric planning IPO for consumer-lending arm

General Electric Co. plans to spin off the U.S. consumer lending business of its finance arm with an initial public offering of stock that could come early next year, according to The Wall Street Journal.

The newspaper also said Friday that the Fairfield, Conn., conglomerate is considering smaller spinoffs or asset sales, but it has started preliminary work on the IPO. The paper cited unnamed sources familiar with the matter.

The consumer finance business provides store credit cards to about 55 million people for retailers like Wal-Mart Stores Inc. It accounts for $50 billion of GE Capital's $274 billion in outstanding loans, according to the report.

Aside from its finance business, GE sells a wide variety of industrial equipment and appliances around the world. This includes jet engines, medical diagnostic equipment, oil and gas drilling equipment and washing machines.

GE representatives did not immediately return calls early Friday morning from The Associated Press seeking comment.

Shares of GE climbed 23 cents to $23.34 before markets opened. That put the stock up 11 per cent so far this year.

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Laurentian Bank reports 6% drop in income in Q3

Laurentian Bank says its third-quarter net income fell six per cent as it booked higher costs from the integration of new businesses.

The Quebec-based bank said its quarterly profits dropped to $28.3 million, or 91 cents per share, from $30 million, or $1.06 per share, a year earlier.

On an adjusted basis, which filters out the one-time expenses, profit increased 13 per cent to $39.8 million, or $1.31 per share, which was two cents below analyst expectations, according to a survey by Thomson Reuters.

Revenue grew 14 per cent to $221 million from $193.8 million.

The bank said it booked $14.6 million in higher expenses related to the integration of AGF Trust and the MRS Companies operations, including the IT systems, employee relocation costs and salaries. (The Canadian Press) 09:42ET 30-08-13

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GDP, consumer spending grew in 2nd quarter

Canada's economy grew by 1.7 per cent in the second quarter of this year, and consumer spending was up almost one per cent in that period, according to the latest Statistics Canada figures released Friday.

Real GDP growth, expressed as an annualized rate, was better than the 1.6 per cent analysts and the 1.0 per cent the Bank of Canada were predicting but was less than the 2.2 per cent growth seen in the first quarter. U.S. GDP growth, by comparison, was up 2.5 per cent in the second quarter.

Growth in consumer spending, which was at its fastest pace since the last quarter of 2010, was driven by spending on durable goods, which grew by 3.2 per cent.

Vehicles accounted for a good portion of that growth, with vehicle purchases increasing by 4.7 per cent.

"This was the fourth consecutive quarterly increase in vehicle purchases, and the strongest advance since the first quarter of 2012," Statistics Canada said.

Alberta floods boost insurance spending

Spending on services also saw an uptick, growing by 0.7 per cent. In this category, insurance and financial services accounted for much of the growth, increasing by 1.4 per cent, largely on account of higher claims resulting from the flooding in southern Alberta in June.

Household spending grew at a faster pace than household income in the second quarter, and both the savings rate and the debt service ratio of households were down slightly from the previous quarter.

The household saving rate was 5.1 per cent, compared to 5.3 per cent in the first quarter.

The debt service ratio was 7.15 per cent, versus 7.26 per cent in the first quarter. The average rate was 7.3 per cent in 2012.

June results show 0.5% contraction

Statistics Canada also released June results Friday that showed that real GDP contracted slightly that month, decreasing by 0.5 per cent. The 1.9 per cent decline in construction accounted for much of that, caused in part by a labour dispute in Quebec. Non-residential building construction was down 7.3 per cent in June.

Wholesale and retail trade were also down in June — by 2.4 per cent and 1.4 per cent, respectively. A decline in agricultural supplies and building materials and supplies accounted for much of the drop in the wholesale sector. Slower sales in food and beverage stores and motor vehicle and parts were responsible for the decline in retail trade, which had seen three months of growth prior to June.

The Royal Bank of Canada said in its analysis of the numbers that it expects the economy to rebound from the effects of the Alberta floods and the Quebec construction strike by the next quarter.

"We are assuming more than a full reversal of the June weakness to occur through the third quarter," RBC Economic Research said in an emailed statement. "This is expected to send Q3 GDP growth back up to 3.4 per cent."

Statistics Canada also noted that while Canada's exports were up by 0.2 per cent overall in the second quarter, exports were notably lower in energy products (-6.3 per cent) and farm, fishing and intermediate food products (-6.5 per cent).

Imports saw slightly slower growth than in the first quarter, inceasing by 0.4 per cent versus 0.6 per cent in the previous quarter.

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Canadians confident about finances but not jobs

Canadians were more confident about their finances in August than in July but less so about their job prospects, the Conference Board of Canada reported Friday.

The board said its consumer confidence index rose 2.2 points to 84.7 in August. The index measures confidence relative to 2002, which is assigned an index value of 100.

"While the index has recorded only a marginal improvement since the start of 2013, on a year-over-year basis, it has posted gains in seven of the eight surveys so far and now stands 9.2 points higher than where it was in August 2012," the Conference Board said in its analysis of the survey results.

Nineteen per cent of those who participated in the board's telephone survey between Aug. 8 and 19 said they were financially better off than six months ago, an increase of three percentage points from July.

Almost 25 per cent said they thought their finances would improve going forward, compared to about 22 per cent in July. But only 14.1 per cent said they expect to see more jobs in their communities within six months, 2.6 percentage points less than the previous month.

The job market confidence numbers were down 6.2 percentage points since the start of the year, the lowest level recorded in 14 months, the board said.

Less optimism in B.C. than Prairies

The survey revealed significant regional differences when it came to feelings about finances and the job market.

Residents in British Columbia were much less optimistic about their personal financial situation and the future job market this month than in July. The consumer confidence index in that province dropped 14 points to 93.9.

"On the other hand, in the Prairie region, confidence surged to its highest level this year," the board said. "The index there gained 6.9 points to reach 105.6, as a significant majority of respondents in the three provinces said they expect their finances to continue to improve going forward."

In Ontario, the number of people who thought their finances had improved in the last six months was at its highest level since the spring of 2010, with 20.5 per cent of respondents saying they were better off, an increase of five percentage points over July.

That helped pushed the consumer confidence index up 4.4 points to 79.6 despite the fact that only 12.3 per cent of respondents in that province expected job prospects to improve.

The survey has an error of plus or minus 2.1 per cent.

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Company behind PCB contamination misses midnight deadline

The deadline has come and gone, and the City of Pointe Claire says it has not heard from the company that was storing PCBs illegally for the past 15 years.

Reliance Power Equipment had until midnight to come up with a plan to remove the transformers full of the chemicals and to clean up the PCB-laden oil from its West Island property. Between 800 and 1,200 litres of oily liquid containing large concentrations of PCBs (polychlorinated biphenyls) leaked from Reliance's property last March.

Now that the deadline has passed, the environment ministry is set to take over the cleanup.

"The city council of Pointe Claire insists on behalf of Pointe Claire citizens that immediate action be taken by the [Environment ministry] and considers unacceptable any additional administrative delay," he said

McMurchie also asked Montreal's public health agency to inform Pointe Claire residents of the health risks associated with the Reliance operation.

Reliance Power Equipment has been keeping unsupervised transformers full of PCBs in its yard for the past 15 years. (CBC)

"Council requires that the ministry make public any information related to this site, the contamination level, as well as any other relevant information," he said.

The City of Pointe Claire will continue to monitor the site until the Quebec government takes over.

It's estimated the cleanup will cost between $2 and $2.5 million.

Yesterday, Environment Minister Yves-François Blanchet said Reliance Power Equipment will be billed for the work.

The dangers of PCBs

McGill environmental assessment expert, Michel Bouchard, says until the cleanup is completed, there should be around-the-clock security at the site.

He says PCBs are volatile, and present a serious health risk.

"The real danger is combustion, either accidental fire or…[arson] by somebody who would want to do something bad," Bouchard says.

If the contaminated area caught fire, smoke carrying the PCBs could spread to outlying areas, including Montreal.

PCBs were once used as a coolant and insulating fluid.

The import, manufacture and sale of PCBs were made illegal in Canada in 1977.

However, Canadian legislation has allowed owners of PCB equipment to continue using the equipment until the end of its service life.

In 1988, 500 barrels of oil laced with PCB exploded at a warehouse St-Basile-le-Grand, sending plumes of smoke across the region and forcing residents to flee.

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U.S. grew 2.5% in 2nd quarter on stronger exports

The U.S. economy grew at a 2.5 per cent annual rate from April through June, much faster than previously estimated, the Commerce Department announced today.

The U.S. also reported a decline in joblessness, with the number of people seeking U.S. unemployment benefits for July near the lowest level in more than five years.

Employers have added an average of 192,000 jobs a month since January, pushing the unemployment rate down to 7.4 percent in July from 7.6 per cent in June.

The steep revision in GDP growth was largely because U.S. companies exported more goods and imports declined. The improvement in the trade deficit helped offset weaker government spending.

Second-quarter growth was sharply higher than the initial 1.1 per cent rate from January through March.

Economists expect growth will stay at the 2.5 per cent rate in the second half of the year, helped by steady job gains and less drag from federal spending cuts. But some worry that increases in interest rates could slow the economy's momentum.

The U.S. Labor Department reported employers are reducing the number of layoffs, though few are hiring aggressively.

The four-week average for unemployment benefits inched up 750 people to 331,250 after reaching a 5 1/2-year low the previous week.

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WestJet orders 65 new Boeing 737 MAX jets

Calgary-based WestJet Airlines Ltd. has announced it will expand its fleet with the addition of 65 Boeing 737 MAX aircraft.

The carrier announced Friday that it has signed a letter of intent to buy 40 737 MAX 8 and 25 737 MAX 7 aircraft, with delivery scheduled to begin in September 2017.

WestJet's current fleet includes 103 Boeing Next-Generation 737 and four Bombardier Q400 NextGen aircraft.

The airline has changed an earlier order from Boeing and will substitute 15 Boeing Next-Generation 737 aircraft scheduled for delivery between December 2014 and 2018 with Boeing 737 MAX aircraft. It previously announced a deal for 10 737 Boeing Next-Generation aircraft.

The order marks an ambitious expansion to the fleet as WestJet, which launched its regional carrier, WestJet Encore, in June takes on new routes. The airline reported an 8 per cent annual increase in passenger traffic last month.

The 737 MAX aircraft are the newest incarnations of the hard-working 737. Boeing says the 737 MAX aircraft is the most fuel-efficient single-aisle aircraft on the market as its CFM International LEAP-1B engines have lower than average carbon dioxide emissions.

WestJet now anticipates its capital expenditures of $210 million to $220 million for the third quarter of 2013, and between $690 million and $710 million for the full-year 2013. Previously, WestJet had anticipated between $100 million and $110 million for the third quarter of 2013, and between $610 million and $630 million for the full-year 2013.

A final purchase agreement with Boeing is expected before the end of September.

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Salesforce confirms 200 more job cuts

Salesforce Marking Cloud has confirmed it is cutting another 200 jobs, after the social media monitoring company shed more than 100 jobs last fall.

A Salesforce spokesperson said in an email statement the job losses follow a recent acquisition of another company.

"Combining ExactTarget with our existing Marketing Cloud provides synergy, and we will be reducing our total headcount by approximately 200 people globally to reflect this opportunity," the statement said.

"We care deeply about our employees and we're providing resources to position them for success in the next step of their careers — whether that's a new position within salesforce.com or a new opportunity elsewhere."

New Democratic Party Leader Dominic Cardy said the company's latest round of job cuts shows the failure in economic development policies of both the Progressive Conservative and former Liberal governments.

"Once again, we see a situation where government invested huge amounts of time and effort into trying to pick economic winners and losers, only to see promised jobs not only fail to be created but actually disappear," Cardy said in a statement.

Salesforce Marketing Cloud, which bought the Fredericton-based Radian6 in March 2011, confirmed in October that it was eliminating about 100 jobs globally.

Those job cuts are coming four months after the social media monitoring company announced plans to create 300 new full-time jobs in Fredericton and Saint John with the help of a $3.8-million payroll rebate from the provincial government.

Cardy also criticized the payroll rebate policy used with Salesforce.

"The point is that even if the money was not spent, there was $3.8 million of public funds that were put on hold for this company, funds that could have been put to much more effective use laying the foundation for sustainable economic growth, funds that would enhance and nurture the workplace talents of New Brunswickers as a means of creating jobs," Cardy said in a statement.

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U.S. fast-food workers hold walkouts over low pay

U.S. fast-food customers in search of burgers on Thursday might run into striking workers instead.

Organizers say thousands of fast-food workers were set to stage walkouts in dozens of cities, part of a push to get chains such as McDonald's, Taco Bell and Wendy's to pay higher wages.

It's expected be the largest in a series of nationwide strike by fast-food workers, according to organizers.

Workers say they want $15 US an hour, which would be about $31,000 US a year for full-time employees. That's more than double the federal minimum wage, which many fast food workers make, of $7.25 an hour, or $15,000 a year.

White House urges higher minimum wage

The move comes amid calls from the White House, some members of Congress and economists to raise the minimum wage, which was last raised in 2009. But most proposals seek a far more modest increase than the one workers want. President Barack Obama wants to raise it to $9 an hour.

The push has brought considerable attention to the so-called "McJobs" that are known for their low pay and limited prospects.

Fast-food workers say they can't live on what they're paid.

Shaniqua Davis, 20, lives in New York City with her boyfriend, who is unemployed, and their one-year-old daughter. Davis works at a McDonald's, earning $7.25 an hour. Her schedule varies, but she never gets close to 40 hours a week. "Forty? Never. They refuse to let you get to that (many) hours."

Her weekly paycheque is $150 or much lower. Davis plans to take part in the strike Thursday.

McDonald's, Burger King respond

McDonald's Corp. and Burger King Worldwide Inc. say they don't make decisions about pay for the independent franchisees that operate the majority of their U.S. restaurants.

For the restaurants it does own, McDonald's said in a statement that pay starts at minimum wage but the range goes higher, depending on the employee's position and experience level. It said that raising entry-level wages would mean higher overall costs, which could result in higher prices on menus.

"That would potentially have a negative impact on employment and business growth in our restaurants, as well as value for our customers," the company said in a statement.

The Wendy's Co. and Yum Brands Inc., which owns KFC, Pizza Hut and Taco Bell, did not respond to a request for comment.

The National Restaurant Association says the low wages reflect the fact that most fast-food workers tend to be younger and have little work experience. Scott DeFife, a spokesman for the group, says that doubling wages would hurt job creation, noting that fast-food chains are already facing higher costs for ingredients, as well as new regulations that will require them to pay more in health care costs.

Mary Kay Henry, president of the Service Employees International Union, which is providing the fast-food strikes with financial support and training, said the actions in recent months show that fast-food workers can be mobilized, despite the industry's relatively higher turnover rates and younger age.

"The reality has totally blown through the obstacles," she said.

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World markets down on Syria fears

The Toronto stock market was lower Tuesday, joining other global markets in pulling back amid worries about the possible ramifications of Western countries intervening in Syria's civil war.

Selling pressure extended to most financials even as two of the big Canadian banks turned in strong earnings reports.

The S&P/TSX composite index lost 169.08 points or 1.32 per cent to 12,591.21 with losses limited by gains in gold and energy stocks as geopolitical uncertainty send bullion and oil prices higher.

The Canadian dollar rose 0.26 of a cent to 95.47 cents US on Tuesday, after declining earlier in the day as traders sought the perceived safe haven of the U.S. currency.

Mounting tensions with Syria sent gold and oil prices higher. Gold reached its highest price since mid-May with the December contract for gold up $27.10, or 2 per cent, to $1,420.20 US an ounce. In energy trading, crude oil rose $3.09, or 2.9 per cent, to $109.01 US a barrel, the highest since February 2012.

U.S. indexes down on Syria news

U.S. indexes were lower a day after U.S. Secretary of State John Kerry claimed it was "undeniable" that the Syrian government had used chemical weapons.

The prospect of a U.S.-led military action against the Assad regime became more likely Tuesday.

In an interview with BBC television U.S. Defence Secretary Chuck Hagel said Tuesday that the U.S. military had "moved assets in place to be able to fulfil and comply with whatever option the president wishes to take,"and the Reuters news agenmcy reported that representatives of "Western powers" had told the Syrian opposition to expect a Westeren-led attack in days.

The threat of military intervention was enough for investors to cut their exposure to risky assets such as stocks and the Dow Jones industrials fell 170.33 points to a two-month low of 14,776.13.

The Nasdaq was down 78.13 points to 3579.44 while the S&P 500 index lost 25.53 points to 1631.25.

"The law of unintended consequences and the history of previous military interventions in the region is not a recipe for political and economic stability," said Neil MacKinnon, global macro strategist at VTB Capital in New York.

On the economic calendar, traders took in data showing rising American consumer confidence. The U.S. Conference Board's August index came in at 81.5, up from 80.3 in July.

The strong reading followed other data released during the past two sessions that contained disappointing readings on home sales and durable goods orders.

Traders have been wondering if the Federal Reserve thinks the economy is strong enough to allow it to start to reduce its monetary stimulus next month.

At present, the Fed is buying $85 billion US of financial assets a month in order to lower long-term interest rates and shore up the U.S. economic recovery. Up until recently, a run of data, particularly related to the labour market, had ratcheted up expectations that the so-called tapering will begin in September.

Oil rises up on concern about unrest

The price of oil has risen more than 15 per cent in the past three months on concern that unrest in Egypt and civil war in Syria could disrupt production and exports, especially in Libya and Iraq. It has also raised the spectre of spreading violence that could block important supply routes.

The base metals component was down 0.4 per cent even as signs of improving economies in the U.S. and China pushed copper prices higher with the September contract in New York up one cent at $3.33 US a pound.

Other data Tuesday showed that the Standard & Poor's/Case-Shiller 20-city home price index rose 12.1 per cent in June from a year earlier, nearly matching a seven-year high.

And China's National Bureau of Statistics said that profit growth for industrial companies ran ahead to 12 per cent in July from 6.3 per cent in June.

European bourses were negative as London's FTSE 100 fell 0.61 per cent, Frankfurt's DAX declined 1.96 per cent while the Paris CAC 40 lost 2.17 per cent.

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National Bank reports record income in 3rd quarter

National Bank is reporting what it calls record results for the third quarter with per share earnings that beat analyst estimates.

The Montreal-based bank reported Wednesday that it earned $419 million, or $2.39 per diluted share, in net income in the latest period, up from $379 million, or $2.14, in the same period last year.

Revenue rose five per cent to $1.29 billion from $1.22 billion.

Ex-items, net income was a record $391 million, or $2.22 per diluted share, up 11 per cent from $353 million, or $1.98 per share, in the same 2012 period.

Growth strategy paid off

National Bank was expected to earn $2.06 per share in adjusted profits on $1.3 billion in revenues in the third quarter, according to analysts polled by Thomson Reuters.

"Thanks to sustained growth across its three business segments, National Bank reported record net income in the third quarter of 2013," president and CEO Louis Vachon said in releasing the bank's earnings report.

"Our credit quality and financial strength remain excellent, and our pan-Canadian growth strategy has paid off with strong performance in the wealth management and financial markets segments."

"Furthermore, the bank continues to seek out opportunities, as was the case for the acquisition of TD Waterhouse Institutional Services announced on Aug. 1," he said.

Earlier this month, National Bank announced it was entering into an agreement to pay $250 million for TD Waterhouse Institutional Services, which provides back-office and support solutions for portfolio managers and brokers across the country.

The deal, which is expected to close later this year, is still subject to regulatory approvals and other conditions.

National Bank said it will add 260 additional market intermediaries who serve 130,000 client accounts and manage approximately $34 billion in assets. Through its Correspondent Network, it already oversaw 350,000 client accounts with client assets of $50 billion.

The bank said the acquisition will help it increase its payout of recurring earnings per share by 12 cents in 2014, and 14 cents the year after.

National Bank is Canada's sixth-largest bank, with about $185 billion in assets and close to 20,000 employees across the country.

National Bank is the third large Canadian bank to report this week. Scotiabank and Bank of Montreal both reported Tuesday. Royal Bank, Toronto-Dominion and CIBC report on Thursday.

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Syria escalation pushes oil prices past $112 US

The price of oil ricocheted Wednesday as the U.S. edged closer to intervening in Syria's civil war, surging past $112 US a barrel before giving up most of those gains.

U.S. Defence Secretary Chuck Hagel said Tuesday that American forces were ready to act on any order by President Barack Obama to strike Syria in response to the alleged use of chemical weapons in the conflict.

U.S. benchmark oil for October delivery was up 79 cents to $109.80 a barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. Earlier in the day, oil rose as high as $112.24.

Oil prices jumped $3.09 to close at $109.01 a barrel on the Nymex on Tuesday. Still, the price remains far below its record close of $145.29 a barrel, reached on July 3, 2008.

Traders fear conflict will spread

The price of oil is has surged more than 15 per cent in the last three months on concerns over the civil war in Syria and unrest in Egypt. Neither country is a major oil exporter, but traders worry that the violence could spread to more important oil-exporting countries or disrupt major oil transport routes.

"Syria's political-economic-military links to Iran, Hezbollah and Russia underline the threat of unintended chain-reaction resulting in wider regional instability. Threat of supply disruption is not insignificant," said Vishnu Varathan of Mizuho Bank Ltd. in Singapore in a market commentary.

Brent crude, the benchmark for international crudes, jumped 85 cents to $115.21 a barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex:

• Heating oil added 0.9 cent to $3.174 per gallon.
• Natural gas was steady at $3.534 per 1,000 cubic feet.
• Wholesale gasoline rose 1.6 cents to $2.929 per gallon.

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Bombardier negotiating $3.4B sale of Q400 planes to Russia

Bombardier has signed a preliminary agreement with a Russian state corporation for the purchase of as many as 100 Q400 NextGen aircraft in a deal that could be worth up to $3.39 billion US.

The Montreal-based plane and train manufacturer says the deal with Rostekhnologii, a state corporation controlled by the Russian Federation, also includes the possibility of setting up a Q400 NextGen final assembly line in Russia to complement its Toronto operations.

It says the manufacturing facility in the Russian Federation is a key commercial requirement for the deal, and would be managed by a joint venture between the two parties. The line would produce aircraft for Russian customers

The sales agreement is expected to be finalized in 2014.

It includes 50 Q400 NextGen aircraft to be sold to Russian operators and the potential placement of at least another 50 in the region.

There are currently more than 120 Bombardier commercial aircraft in service in Russia and the Commonwealth of Independent States.

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Japan Fukushima plant's radioactive leak severity upgraded

Japan's nuclear regulator on Wednesday upgraded the rating of a leak of radiation-contaminated water from a tank at its tsunami-wrecked nuclear plant to a "serious incident" on an international scale, and it castigated the plant operator for failing to catch the problem earlier.

The Nuclear Regulation Authority's latest criticism of Tokyo Electric Power Co. came a day after the operator of the Fukushima Dai-ichi nuclear plant acknowledged that the 272-tonne (300-ton, 300,000-litre, 80,000-gallon) leak probably began nearly a month and a half before it was discovered Aug. 19.

In a meeting with agency officials and experts Tuesday night, TEPCO said radioactivity near the leaky tank and exposure levels among patrolling staff started to increase in early July. There is no sign that anyone tried to find the source of that radioactivity before the leak was discovered.

On Wednesday, regulatory officials said TEPCO has repeatedly ignored their instructions to improve their patrolling procedures to reduce the risk of overlooking leakages. They said TEPCO lacked expertise and also underestimated potential impact of the leak because underground water is shallower around the tank than the company initially told regulators.

"Their instructions, written or verbal, have never been observed," Toyoshi Fuketa, a regulatory commissioner, said at the agency's weekly meeting Wednesday.

TEPCO acknowledged recently that only two workers were assigned to check all 1,000 storage tanks at the plant during their twice-daily, two-hour walk without carrying dosimeters, and their inspection results were not adequately recorded. TEPCO said it will increase patrolling staff to 50 from the current eight.

Earlier this week, Japan's industry minister, Toshimitsu Motegi, said the government will take over cleanup efforts and allocate funding for long-term contaminated water management projects.

Upgrade follows consultation with IAEA

The nuclear authority originally gave a Level 1 preliminary rating — an "anomaly," to the tank leak. Last week the authority proposed raising that to Level 3 — a "serious incident" — and it made that change after consulting with the International Atomic Energy Agency.

The IAEA's ratings are designed to inform the international community, and changing them does not affect efforts to clean up the leak by the government and TEPCO. The 2011 Fukushima disaster itself was rated the maximum of 7 on the scale, the same as the 1986 Chernobyl accident.

"What's important is not the number itself but to give a basic idea about the extent of the problem," authority chairman Shunichi Tanaka said at a news conference after the agency's meeting. "I've seen reports that this is a dire situation but that's not true."

Tanaka said there is a much larger ongoing problem at the plant: massive amounts of contaminated ground water reaching the sea. But that problem cannot even be rated under the IAEA's International Nuclear and Radiological Event Scale because it is unknown exactly how much ground water is escaping, how contaminated it is and what effect it is having on the sea and marine products.

Tanaka said TEPCO's handling of the water leaks was slow, illogical and lacked risk management. TEPCO has yet to determine the cause of the latest leak.

"I'm baffled," he said. "It may take time to stabilize the plant but we must put it on a right track."

TEPCO has recovered some of the water that leaked from the tank but says some of it may have reached the sea through a rainwater gutter. It says most of the leakage is believed to have seeped into the soil, triggering fresh concern of further contamination of underground water downstream.

TEPCO has built hundreds of tanks to hold radioactive water, some of which is ground water that made its way to the plant, but hundreds more tonnes of contaminated water are believed to be entering the sea each day.

The plant suffered triple meltdowns after the massive earthquake and tsunami in March 2011. TEPCO is putting tonnes of water into its reactors to cool them and is struggling to contain the resulting waste water.

Updated map of the Fukushima complex showing where two high radiation readings near storage tanks were recorded on Wednesday. (Reuters)

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BMO, Scotiabank report revenue bump in 3rd quarter

The Bank of Montreal has reported improved net earnings and revenue for the third quarter that beat analysts' expectations while Scotiabank has increased its quarterly dividend by two cents to 62 cents per share even as the bank reported a decline in third-quarter net income and a slight rise in revenue.

The two banks were the first to report their third-quarter earnings Tuesday. The Royal Bank, Toronto-Dominion Bank and CIBC were expected to report their results on Thursday.

BMO, which left its dividend unchanged, said net income was $1.137 billion, or $1.68 cents per share, up from $970 million, or $1.42 per share, in the same period a year ago.

Revenue rose to $4.05 billion from $3.88 billion.

Adjusted net income was $1.136 billion, or $1.68 cents per share, versus $1.013 billion, or $1.49 cents per share, a year ago.

Analysts surveyed by Thomson Reuters were expecting $1.52 in adjusted earnings per share and revenue of $3.96 billion.

'Disciplined growth strategy'

Provisions for credit losses fell to $77 million from $237 million a year ago, with adjusted provisions for credit losses declining to $13 million from $116 million.

BMO has been focusing on cost controls to help weather the recent wave of sluggish consumer lending, and president and CEO Bill Downe said the third-quarter results "reflect the benefits of our disciplined growth strategy."

"Canadian retail businesses were particularly strong in the quarter with both personal and commercial banking … and traditional wealth earnings reaching new highs," he said.

"Looking forward, we see opportunities for growth in each of our businesses in an improving North American economy led by the United States, and this gives us confidence we're well positioned heading into 2014.

The bank has more than 46,000 employees across its North American operations, which include retail banking, wealth management and investment banking, as well as the Chicago-based Harris Bank subsidiary.

Scotia Plaza sale boosts Scotiabank earnings

Scotiabank, meanwhile, said net income in the quarter was $1.768 billion, or $1.37 per diluted share, compared with net income of $2.051 billion, or $1.69 per diluted share, in the same period a year earlier.

Revenue rose to $5.52 billion from $5.51 billion, and the bank raised its quarterly divided by two cents to 62 cents per share.

Canada's most international bank noted that last year's results benefited from an after-tax gain of $614 million on the sale of Scotia Plaza in Toronto, equivalent to 53 cents per share.

The most recent quarter included a net benefit of seven cents per share related to non-recurring items in international banking, including a gain on the sale of a subsidiary by an associated corporation.

Scotiabank says that adjusting for both these items, diluted earnings per share grew 12 per cent.

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Lifting of wireless foreign-ownership limits unlikely, experts say

The Fraser Institute's controversial proposal to open up Canada's wireless market by eliminating limits on foreign ownership will add a spark to the debate about competition in the sector but is unlikely to be put into practice, telecommunications analysts say.

"It's a stunningly provocative suggestion," said independent technology analyst Carmi Levy. "It would represent a seismic shift in Canada's telecom landscape. It makes for great headlines, but it's not very likely."

The Fraser Institute suggested in a report released Monday that the government should remove restrictions on foreign ownership of telecommunication companies and apply the same rules to both domestic and foreign firms operating in Canada.

Currently, foreign entities can only control companies that have a market share of 10 per cent or less, and this, along with the setting aside of some wireless spectrum solely for new entrants, thereby limiting the amount controlled by incumbents, promotes inefficient competition, the author of the report, Steven Globerman, argues.

Allowing foreign investors to enter Canada on a larger scale through mergers and acquisitions would "increase competition and provide tangible incentives for wireless companies to improve service and pricing for Canadian consumers," the Fraser Institute said.

The conservative think-tank's contribution to the heated debate over ownership and competition in the wireless industry comes mere weeks before the mid-September deadline for applicants who want to bid on the latest batch of wireless spectrum that will be up for grabs in the January 2014 auction.

The upcoming spectrum auction has attracted heightened attention of late because of rumours that U.S. telecoms giant Verizon is considering entering the Canadian market by either buying up smaller players like Wind or Mobilicity or bidding on spectrum itself.

Canada's "big three" telecom companies — Bell, Telus and Rogers — have warned that Verizon's entry could give the U.S. company an unfair advantage in the Canadian market and have also called on the government to loosen the auction and ownership rules to allow them to bid on all blocks of the spectrum and to buy up smaller players like Wind and Mobilicity.

Broadcasting Act would have to be changed

But while many analysts saw the benefit of discussing possible changes to Canada's telecom rules, few thought the scenario proposed by the Fraser Institute was possible — not least because it would require changes not just to the Telecommunications Act but also to the Broadcasting Act.

"Practically speaking, allowing external-to-Canada companies to bid for and buy a Canadian carrier with greater than 10 per cent national market share is an impossibility," said telecommunications analyst Iain Grant of the Seabord Group.

"Changing the Broadcasting Act means rebuilding the entire structure of Canada's cultural industry and how it is financed ... Changing the telecom act, a relatively trivial task, took over a decade."

The federal government lifted the ban on foreign ownership in the telecoms sector in 2012 but only up to the 10-per-cent market share limit and only after extensive "debate, studies and consultative dialogue," Grant said.

That's in part, says Levy, because telecoms are considered "a national treasure" in Canada.

"Successive governments, whether Liberal or Conservative, have been careful not to shift regulatory position too radically," Levy said.

4th player will face hurdles

Even if foreign ownership limits were lifted, any foreign entrant would still have large obstacles to overcome before conquering a decent chunk of the Canadian market, analysts said.

"It is incredibly difficult to enter any telecom market. Overcoming the technical hurdles, the regulatory hurdles, then marketing yourself to consumers that have been entrenched," he said.

"You also need a player that can stick around for the long-term. Let's say Verizon buys Wind, it will be a small, fourth player. You can't simply buy your way into the market. It takes time."

Levy sees a more likely outcome of the debate the Fraser Institute has ignited as a possible inching up of the current 10-per cent ownership limit to perhaps 15 or 20 per cent.

Ian Nakamoto, director of research at the Toronto investment firm MacDougall MacDougall & MacTier, agrees that it would be difficult for Verizon or another foreign player to get a foothold in the saturated Canadian market

"Even Verizon comes to Canada, the average person doesn't know it. It will all come down to prices," he said.

'We've had many tries at competitors coming in, and they've all failed.'— Ian Nakamoto, MacDougall MacDougall and MacTier

"It's a mature market. If this was 15 years ago, where the wireless penetration was much lower, then I could see a foreign company coming in here and establishing a beachhead. Most people now have a wireless phone, so the incremental numbers are relatively small."

Past experience demonstrates that even with government support, new players have a hard time succeeding in the Canadian market. Wind, Mobilicity, Public Mobile all benefited in the last spectrum auction in 2008 but have still struggled and are now looking to sell off their assets to larger players like Verizon and Telus.

"We have a large geography with a relatively small population … so, how many carriers does Canada justify?" Nakamoto said. "We've had many tries at competitors coming in, and they've all failed."

The Public Interest Advocacy Centre, which advocates on behalf of consumer interests, said a measured approach to loosening the restrictions in the wireless market seems to have worked best in Canada and warned that opening up the entire telecoms market could simply amount to nothing more than "money trading hands with no net consumer benefit."

With files from Asher Greenberg

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Owning a home becoming less affordable

Home ownership has become less affordable for the average Canadian, but that hasn't stopped many from jumping into what may already be an overpriced market, suggests a new report from the Royal Bank.

Royal Bank says its housing affordability index reversed course in the second quarter of this year in two of the three categories it measures — bungalows and two-storey homes — after generally improving over the past year.

That means that on average, Canadians were paying more of the pre-tax income to service their homes compared to the first quarter of the year, although the index is still down from a year ago.

The quarterly increase was not spectacular — 0.3 points to 42.7 per cent on a detached bungalow and 0.4 points to 48.4 per cent on a standard two-storey home. The index on a condo was unchanged at 27.9 per cent.

As with past samplings, Vancouver and Toronto continue to stand out as the least affordable cities. During the second quarter, Vancouver's affordability reading rose 2.2 points to 82.1 on a detached bungalow, while Toronto's edged up half a point to 54.5.

By contrast, other major municipalities were far more tame and below the national average. On a detached bungalow, Montreal slid slightly to 38.1 per cent, Ottawa was mildly higher at 37.1, Edmonton was at 34.0 despite a 1.8 point gain, and Calgary held steady at 33.0.

Sales on the rise

The affordability index measures the cost of servicing a home, including mortgage payments, utilities and taxes, in relation to a household's pre-tax income. The higher the reading, the less affordable is a home to a particular family.

RBC chief economist Craig Wright noted that the deterioration in affordability did not scare many Canadians from jumping feet first into the housing market during the second quarter as sales actually surged by 6.4 per cent, following a general slowdown since last summer's introduction of stiffer mortgage lending rules.

"We saw a bit of a bounce-back in prices," said Wright. "We had a series of regulatory changes, but now it looks like the market has adjusted and now seems to be recovering somewhat."

The report is for the April to June period and does not capture this month's announced increases of between 0.1 and 0.2 per cent — 10 or 20 basis points— in posted mortgage rates at several major banks. A 20-basis point hike in rates will increase monthly payments up to $100 on a typical $500,000 mortgage.

"Mortgage rates will be the next challenge," Wright added. "The move upward we've seen probably suggests that affordability will be a little more challenging [in the third quarter]."

But he noted that despite what has been a hot housing market in Canada, with prices hitting new highs almost monthly, affordability remains close to historic levels in part because interest rates are so low.

Central bank warns of rising interest rates

The Bank of Canada has long warned Canadians to take a forward-looking approach to home ownership and calculate what will happen to monthly payments once interest rates begin to rise, which it says is inevitable.

But Wright said the situation of affordability is more complex than simply interest rates. A sharp spike in rates will cause problems, yet most, including the Bank of Canada, currently anticipate the increases will be modest and gradual and won't likely start occurring until late next year. The central bank has kept its short-term trendsetting rate at one per cent for now.

As well, Wright points out that the bank will likely only start a monetary policy tightening phase once the economy starts improving, so the higher rates might be offset by an improvement in employment and in incomes, which could offset the negative impact on household finances. Higher rates might also lead to lower real estate prices, which also improves affordability.

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Australian surfwear maker Billabong reports $811M loss

Billabong International Ltd. reported a $811 million annual loss Tuesday that reflects a collapse in the value of the Australian company's once hot surf and street fashion brands.

The company said it marked down the value of its assets by $867 million Australian ($818 million). That write-off resulted in a net loss of $859.5 million Australian ($811 million) for the financial year ended June 30.

Billabong has staggered through a series of business shake-ups and failed buyout offers. In June, its shares fell by 50 per cent to 23 Australian cents after a takeover bid by two private equity firms failed.

The company says it is in the final stages of debt refinancing negotiations that will allow the business to rebuild.

Billabong's global sales for the year fell 13 per cent to $1.34 billion Australian reflecting store closures, Europe's weak economy and the fading allure of its brands.

The Billabong and other brands owned by the retailer were valued at $90 million Australian in the company's financial statements released Tuesday, down from $614 million Australian two years earlier.

The company's shares closed down 5.3 per cent in Sydney.

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Budget 'mistake' more than doubles tax on credit unions

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The NDP is calling on Finance Minister Jim Flaherty to acknowledge a mistake in last spring's federal budget that more than doubled the corporate tax rate for credit unions and bring in a fix immediately.

The government had signalled it was raising the tax rate for credit unions and caisses populaires to 15 per cent from 11 per cent, to bring them in line with Canadian banks.

But a recent Deloitte report found the budget implementation bill passed in the spring will effectively raise the credit unions' tax rate to 28 per cent over the next five years. Deloitte's report said the increase was due to a "technical deficiency" in the budget legislation and that the Finance Department was working to correct it.

"However, our contacts would not provide any assurance that the legislative fix would be enacted prior to the end of 2013 or whether the fix would be retroactive to budget day. Any legislative change is subject to parliamentary approval," the Deloitte report said.

NDP finance critic Peggy Nash said the government needs to address the error imediately.

"We've not heard from the finance minister on how he is going to fix this, we haven't even heard him acknowlege it," Nash said at a press conference in Ottawa Tuesday.

Nash said if the increase was an error, it shows the danger of using omnibus bills to push through a raft of legislative changes and avoid debate.

"If it isn't a mistake, it is a massive penalty on Canada's credit unions," Nash said.

Nash said the NDP was opposed to the planned increase of four per cent, to be phased in over five years, because many credit unions are not-for-profit or serve a particular role in a community and higher taxes could hinder their ability to fulfill that role. She said some credit unions might not even be aware of the accidental tax hike.

Asked if the NDP would support a fix if the government brings one forward, Nash pointed to the dificulty posed by prorogation, which has delayed the return of Parliament until at least mid-October.

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Big banks' Q3 results expected to show impact of rising interest rates

Canada's biggest banks are expected to show resilience as they report third-quarter earnings this week in the face of higher interest rates that are pressuring the country's housing market.

While the quarterly results are unlikely to shock the market with any major surprises, investors will be closely watching the sector for any signs that the country's financial institutions are feeling the squeeze, suggest analysts.

"To be sure, they are not thriving," wrote Rob Sedran, a bank analyst at CIBC World Markets in a note.

"Loan growth is slowing as expected, margins are stabilizing,

Big banks' Q3 results expected to show impact of rising interest rates

but the pressure remains, and the housing market — well, we are growing a little tired of discussing the risks in the housing market — but suffice to say that the overhang is there."

Outperformed TSX for 8 quarters

Indeed, it has been a tough few quarters for Canada's banks, which weathered the economic downturn with surprising resilience but some ran into other challenges with their trading divisions and U.S. operations.

Even so, the banks have managed to outperform the TSX over the past eight quarters and increase dividends by 14 per cent, said Sedran. Whether they can boost that momentum remains to be seen.

"We believe that significant growth in earnings will be a challenge," said Barclays analyst John Aiken in a note.

There are "few catalysts that could either meaningfully increase consensus estimates or cause the market to suddenly be more willing to pay up for the banks' moderating earnings growth."

A recent study by the Fitch ratings service said the big banks could likely withstand a moderate-to-severe housing downturn. The report said each of the big banks has an equity ratio well above what is required under the new Basel III requirements, which set out key measures of a bank's health and ability to endure future economic downturns.

Too much emphasis is being placed on the negative impacts of rising interest rates on the banks, and not enough on how the banks could benefit from higher rates, said Gareth Watson, vice-president of investment management and research at RichardsonGMP.

While higher interest rates can mean that fewer Canadians will seek out loans for mortgages, other divisions of banking operations can benefit, he said. For example, the banks could strategize to use cash on their hands, and higher rates, to their advantage.

"These banks have known that this situation was going to be coming for a long time," Watson said.

"They've had time to prepare, and for that reason, I don't think you're going to see a huge abrupt impact to earnings just because you might see a rising interest rate environment."

BMO will be 1st to report

Earnings reports are squeezed into a schedule that's tighter than usual this quarter, likely motivated by the Labour Day holiday on Sept. 2.

First to report will be Bank of Montreal and Scotiabank on Tuesday morning. Consensus expectations from analysts are for BMO to report $1.52 earnings per share while Scotiabank is pegged at $1.30 per share.

On Thursday, the rest of the major banks issue their results. Analyst expectations are for CIBC to report earnings of $2.15 per share while Royal Bank is expect to post $1.38 per share.

Last month, TD Bank gave investors advanced notice that it expected to book an after-tax loss of between $240 million to $290 million during the quarter as it recognized claims associated with recent severe flooding in Alberta and the Toronto area.

Analyst expect TD to report $1.55 earnings per share.

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Politics is the biggest obstacle on Canada-U.S. energy front

The strained relationship between Canada and the United States over energy policy is likely to get worse before it gets better, with a decision on Keystone XL likely to politically strain relations between the two countries regardless of whether U.S. President Barack Obama gives the pipeline project the go-ahead or not.

That's one of several findings by pollster Nick Nanos in a study he did as a Public Policy Scholar this year for the Woodrow Wilson International Center for Scholars. His research focused on public opinion and public policy regarding energy and the environment.

"We are desperately in need of a forthright dialogue between Canada and the United States in terms of carbon policy and the environment," said Nanos in an interview from Washington, D.C.

Canada's seeming inability to seal the pipeline project, which is the centrepiece of Prime Minister Stephen Harper's resource-driven agenda, could be the impetus to kick-start talks on environmental policy and energy, something Obama has focused on in his public statements on Keystone.

"My sense is that the one way things might change is if there's a crisis. And the Keystone decision could be a flashpoint to bring Canada and the U.S. together to try to work out a carbon policy," said Nanos.

"And that could happen whether aproved of rejected. If rejected, there will be pressure on the Harper government to start to engage Americans in a real dialogue on the environment and Canada's role as an energy partner. If approved, there will be massive pressure on Obama to engage Canada to meet environmental standards that are acceptable to Americans."

Nanos's study, which was comprised of original public opinion research and in-depth interviews over several months with key stakeholders and advocacy groups in the United States, also found that the majority of Americans support approval of the Keystone XL pipeline, if accepatable environmental standards are met.

Just what those standards are remains up in the air.

"When we look at the polling data, people are fairly agnostic in terms of the energy sources as long as they meet an environmental standard," said Nanos. "The challenge is what is that standard?"

A grid-locked Congress and growing access to shale gas deposits in the United States also makes the approval of the project less of a priority as well.

Don't pick winners and losers

According to Nanos's study, Canada has failed to highlight to Americans the diversity of our energy offerings, with too much of a focus on oilsands products at the expense of showcasing hydro and renewable sources. "Americans think Canada is a one-trick pony," explained Nanos. "But reality is we are a much more diversified energy partner than Americans perceive."

He says Canada should focus on encouraging investment across various energy technologies in order to foster healthy competition within a variety of energy sectors.

As well, a lack of leadership at the national levels within both countries has encouraged regional alternatives where deals are moving forward, such as the effort to move bitumen from West to East in a pipeline deal that would see oilsand products refined in Saint John, New Brunswick.

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1st female member of New York Stock Exchange dies

Muriel "Mickie" Siebert, who started as a trainee on Wall Street and became the first woman to own a seat on the New York Stock Exchange, has died of complications of cancer at age 80.

Siebert died Saturday at Memorial Sloan-Kettering Cancer Center in New York. Her death was confirmed by Jane Macon, a director of Siebert Financial and a partner at the law firm Norton Rose Fulbright.

Siebert was founder and president of brokerage firm that bears her name, Muriel Siebert & Co. Inc. The company went public in 1996 as Siebert Financial Corp.

Macon said Siebert was "a fabulous woman, a trailblazer and a pioneer" who set a high standard for those who entered the financial world after her. "She always pushed the doors open and kept them open for other people to follow."

Served as state banking superintendent

Siebert, who was born in Cleveland and moved to New York in 1954 at age 22, started her career as a trainee in research at Bache & Co. earning a $65 a week. She went on to become an industry specialist in airlines and aerospace and later became a partner at brokerages including Brimberg & Co.

She bought a seat on the New York Stock Exchange in December 1967 after months of struggling with the male-dominated business world that initially resisted her efforts to join. She established her investment firm the same year and transformed it into a discount brokerage house in 1975.

Siebert took a leave of absence from the company in 1977 and placed it in a blind trust to be run by the employees when she was appointed the first woman superintendent of banking for the State of New York by Governot Hugh Carey. She served five years.

As interest rates climbed steeply and bank failures became common, Siebert launched protective measures to prevent banks from failing in New York. She reorganized troubled banks, forced bank mergers, and convinced the federal government to advance millions of dollars to make the new mergers viable. She persuaded stronger institutions to help weaker ones.

In 1982, Siebert resigned from the job to run for the Republican nomination for the U.S. Senate seat of Daniel Patrick Moynihan. She came in second to a state lawmaker, Florence Sullivan, who went on to lose to Moynihan in the November election.

Siebert returned to running her company.

Financial literacy advocate

To celebrate 30 years as member of the exchange, Siebert was invited to ring the closing bell on the NYSE. The ceremony was held on Jan. 5, 1998.

The next year, while president of the New York Women's Agenda — a coalition of over 100 women's organizations — Siebert developed a personal finance program to improve the financial literacy of young people.

The program became part of the New York City high schools economics curriculum for seniors. Siebert worked to expand the program nationally.

An advocate for women in business, she served on several organizations including the Council on Foreign Relations, the International Women's Forum, Deloitte & Touche's Council for the Advancement and Retention of Women, and the New York Women's Forum, for which she was a founder and president.

"Mickie was a pioneer and recognized as a leader throughout the financial services industry and beyond," Siebert Financial Chief Operating Officer Joseph Ramos said in a prepared statement. "Those of us who worked with her will miss her spirit, leadership and great commitment to her clients and the securities markets."

Siebert also is a former appointee to the New York State Commission on Judicial Nomination and the National Women's Business Council.

Siebert, who lived in New York City, never married and did not have any children.

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Wireless foreign ownership limits should end, report says

If the federal government really wants healthy competition in the wireless market, it should just do away with the limits on foreign ownership and other regulations, a new report says.

The analysis published Monday by the right-of-centre Fraser Institute is the latest input into the heated debate on the upcoming auction of valuable wireless spectrum.

The big three Canadian providers — Bell, Telus and Rogers — are furious that current rules might allow an American giant like Verizon to bid at the auction.

As the system works now, the government limits how much of the spectrum the big "incumbent" companies can buy up, in order to encourage smaller players to come to the table. That theoretically would stimulate competition across Canada and ultimately keep prices down.

But those smaller players — Wind Mobile or Mobilicity for example — could be bought up by a firm like Verizon, which would theoretically have an easy time snapping up the spectrum that is off limits to the incumbents. Because those big Canadian firms aren't allowed to bid on all the spectrum available, that could drive down the size of auction bids and give Verizon a potentially good deal.

The report, written by senior Fraser Institute fellow Steven Globerman, argues there is no evidence that handicapping the incumbent companies does anything to improve efficient competition.

'By setting up rules that handicap the three large Canadian telecoms and favour small or new players in the marketplace, the federal government is effectively subsidizing new entrants and promoting inefficient competition. This could make most consumers worse off, rather than better off.'—Fraser Institute fellow Steven Globerman

"By setting up rules that handicap the three large Canadian telecoms and favour small or new players in the marketplace, the federal government is effectively subsidizing new entrants and promoting inefficient competition. This could make most consumers worse off, rather than better off," Globerman says.

"Given conclusive evidence that the wireless sector in Canada is workably competitive, there would be clearly no conceptual case for competitive handicapping," writes Globerman.

He says that getting rid of the remaining barriers to foreign entrants in the Canadian marketplace would create fears of hostile takeovers of the big three companies, thus creating an incentive for them to be more efficient.

But since many telecom firms are in the broadcasting business, the report says that would mean also getting rid of the limits in that industry — a foray into the cultural realm that no Canadian government has wanted to make.

Globerman says the government already has good levers at its disposal for making sure the industry is competitive — namely the Competition Act. In the absence of handicaps in the auction, the Competition Tribunal would evaluate major acquisitions and mergers, and hear complaints about anti-competitive behaviour.

"The elimination of all foreign ownership restrictions ... and reliance upon the Competition Act to deter acquisitions of spectrum that threaten to reduce competition, as well as to discourage any abuses of market dominance that raise rivals' costs or otherwise suppress competition, seem quite adequate competitive safeguards," he writes.

Industry Minister James Moore has already signalled he will not be changing either the date or the rules around the auction, scheduled for January 2014.

The big three telecom companies have been taking out full-page ads and have launched a campaign called "Fair for Canada," arguing Verizon would be getting preferential treatment under the current auction rules.

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Eurozone stocks fall on fears of political crisis in Italy

Italian stocks led eurozone shares lower on Monday as the risk of a new government crisis fuelled a selloff in companies exposed to Italian sovereign debt and posed risks to the country's still weak economy.

Italy's FTSE MIB share index was down 1.6 per cent after members of Silvio Berlusconi's centre-right party warned they would bring down the government if the former premier is expelled from parliament over a recent tax fraud conviction.

The threat of a government crisis raised the prospect of a new wave of political instability that could delay the country's economic reform and dash growing expectations for a pickup in the economy. Early signs of economic improvement have helped the FTSE MIB rise 6.8 per cent in the last month, outperforming Germany's DAX and France's CAC.

"It doesn't look like the politicians will find a compromise to get out of this crisis, which, in turn, puts all measures that need to be taken to spur the economy on ice," a Milan-based trader said.

ECB review expected

Italian banks UniCredit and Intesa Sanpaolo fell around four per cent, as investors worried about their holdings of Italian sovereign bonds, which fell in value on the secondary market.

The two stocks were the biggest drag on the eurozone Euro STOXX 50 index, which was down 0.7 per cent at 2,805.27 points.

The reaction in Italian banking stocks, which have risen 14.7 per cent since the start of the year, was magnified by underlying concerns about some of their other assets, which will come under scrutiny in an upcoming review of eurozone banks to be carried out by the European Central Bank.

"I wouldn't sell Italian sovereign bonds on the back of the latest government tensions," the head of strategy at an Italian investment bank said. "Banks, however, have got a few more problems of their own, such as the asset quality."

Euro STOXX 50 likely to rise

A recent improvement in data on the eurozone economic has helped the Euro STOXX 50 rise around eight per cent since the start of July, or more than twice as much as the U.S. S&P 500.

"It may take a few of days to build a base, but it looks like we're going to have another top for 2013 in Europe," said Valerie Gastaldy, head of Paris-based technical analysis firm, Day-by-Day.

She said she expected the Euro STOXX 50 to reach around 3,000 points in the next month.

Volume on the Euro STOXX 50 was thin at 27 per cent of its 90-day average at 10:54 GMT, partly because London financial markets were closed for a public holiday.

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Canada's July inflation 1.3% as gas prices jump

Canadians are paying more for shelter and much more for gasoline than they did last year, putting the inflation rate for July at 1.3 per cent.

The biggest increase was in the cost of gasoline, up 6.1 per cent from the previous year, with consumers in every province feeling the pain at the pumps.

That helped push transportation costs 2.7 per cent higher, though higher prices for cars also contributed to that increase. Statistics Canada estimates prices to buy passenger vehicles rose two per cent in the year.

There was good news on the cost of food, which rose only a modest 0.8 per cent, the smallest year-over-year increase in more than three years.

But shelter costs rose 1.3 per cent, as rents and the cost of natural gas went up.

The 1.3 per cent inflation rate in July, followed a 1.2 per cent increase in the consumer price index in June and is considered historically low. The Bank of Canada has said it wants to keep Canadian inflation below 2.0 per cent a year.

In a research note released this morning, RBC Economics said it expects inflation to drift gradually higher in the near term as Canada is showing signs of "economic growth that will gradually absorb remaining excess slack in the economy."

As a result of the modest inflation numbers expected for the next year, RBC expects the Bank of Canada will keep its prime rate low well into 2014. The prime rate has not changed, despite higher mortgage rates announced earlier this week.

"We look for the bank to raise the overnight rate in the second half of 2014 when the economy is closer to full capacity and both the headline and core inflation rates are approaching the two per cent target," the research note said.

Consumer prices rose in nine provinces in the 12 months to July with the largest increase in Manitoba, which saw higher cigarette taxes. British Columbia had no overall inflation.

The inflation rate by province:

• Newfoundland and Labrador: 2.0%.
• Prince Edward Island: 2.3%.
• Nova Scotia: 1.5%.
• New Brunswick: 1.0%.
• Quebec: 1.1%.
• Ontario: 1.6%.
• Manitoba: 3.0%.
• Saskatchewan: 1.6%.
• Alberta: 2.2%.
• British Columbia: 0%.

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Nasdaq halt steps up pressure over electronic trading

The latest high-tech disruption in the financial markets increases the pressure on Nasdaq and other electronic exchanges to take steps to avoid future breakdowns and manage them better if they do occur.

The three-hour trading outage on the Nasdaq stock exchange Thursday also can be expected to trigger new rounds of regulatory scrutiny on computer-driven trading. Investors' shaky confidence in the markets also took another hit.

The exchange was set to open as normal Friday.

Questions about potential dangers of the super-fast electronic trading systems that now dominate the U.S. stock markets ripple again through Wall Street and Washington. Stock trading now relies heavily on computer systems that exploit split-penny price differences. Stocks can be traded in fractions of a second, often by automated programs. That makes the markets more vulnerable to technical failures.

New oversight likely on electronic trading

The Commodity Futures Trading Commission expects to put forward next week a plan for new restrictions and oversight on high-speed trading, a person with direct knowledge of the matter said Friday. The person spoke on condition of anonymity because the CFTC commissioners haven't yet voted to open the proposed plan to public comment.

Computer trading has exploded over the past several years and now accounts for more than half of all stock- and futures-market trades. A glitch at a large financial institution can send waves of trades through the system in error.

The CFTC must decide how to control runaway trading algorithms that can wreak havoc in the market and whether high-frequency firms should register with the government or have their trading specially monitored.

The Nasdaq episode cracked the midday calm of a quiet summer trading day on Wall Street. Brokers and traders scrambled to figure out what went wrong.

Nasdaq-OMX CEO Robert Greifeld told CNBC on Friday that unspecified, external factors caused the glitch, and that the exchange followed all the proper procedures to correct the problem.

"We all have to be aware of the other person not acting always in the proper way, and you have to have your system be able to handle defensive driving," Greifeld said. "We're deeply disappointed with what happened yesterday. We aspire to perfection. We want to get to 100 percent up time."

The shutdown appeared to occur in an orderly fashion and didn't upset other parts of the stock market.

But it was a major embarrassment. While hardly as stunning as the "flash crash" that set off a steep and sudden stock-market plunge in May 2010, the Nasdaq disruption some are dubbing the "flash freeze" did stir memories of it.

No proper fix after 2010

After the 2010 market break, regulators "never really developed a fix for it, and these kinds of things are going to continue to happen," said Michael Greenberger, a law professor at the University of Maryland who was the top market oversight official at the CFTC in the late 1990s. High-speed trading commanded by mathematical formulas rather than people brings "the possibility of a calamity," Greenberger said.

Regulators need to slow down automated trading by requiring trades to be placed "with human input," he said.

On Thursday, only a few hours after trading ended for the day, the head of the Securities and Exchange Commission said she will work to finalize SEC rules that would subject U.S. exchanges to tighter oversight of automated trading.

"Today's interruption in trading, while resolved before the end of the day, was nonetheless serious and should reinforce our collective commitment to addressing technological vulnerabilities of exchanges and other market participants," SEC Chairman Mary Jo White said.

SEC looking at Nasdaq systems

The SEC likely will scrutinize Nasdaq's systems and emergency procedures, and could order the exchange to upgrade them if it finds them lacking, said Phil Stern, a former SEC attorney now in private practice. In addition, Nasdaq could face significant financial penalties and other sanctions as a result of the breakdown, Stern suggested.

"The (SEC) is going to have to be satisfied one way or the other that the likelihood of this happening again is extraordinarily remote," he said. "They have to be sure that the Nasdaq has taken every step to avoid a recurrence of this event."

The actions Nasdaq takes, or should take, will be closely watched. Those range from improved testing and backup of its systems to ramping up its crisis management and communicating more clearly with the investing public.

The Nasdaq exchange was born of technology and is dominated by the biggest names in the field like Microsoft, Apple and Google. Thursday's breakdown followed a series of tech-rooted disasters involving various exchanges. They included Facebook's bungled public offering launch on Nasdaq in May 2012, one of the largest IPOs in history. The SEC later fined Nasdaq $10 million for that disruption — the largest penalty it ever imposed on an exchange.

Griefeld's comments

In television interviews today Nasdaq CEO Robert Griefeld said it is too early to tell who is to blame for Thursday's problem.

He said the exchange is working on its "defensive driving" to make sure it can correct problems even when they occur outside Nasdaq's own trading systems.

"It's when the unforeseen happens, the system has to be resilient and robust enough to handle that," he said.

The exchange opted for caution in restarting trading he said. Nasdaq had solved the technical glitch in half an hour, but spent the next two and half hours trying to ensure trading would be "fair and orderly" when it resumed, he added. That process involved communicating with scores of frantic traders and investment firms.

Griefeld said that he couldn't commit to never having another trading halt.

"I can never commit to anybody that there will never be a problem. [What] we have to commit to is we're going to work as hard as we can to get to 100 percent, and to the extent we can't, we can't achieve perfection, and there's an issue, then we have the proper procedures in place to respond to it," Greifeld said.

With files from CBC News

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Ontario aims to lower auto insurance 8% in coming year

Ontario says it plans to reduce car insurance rates by eight per cent in the coming year and 15 per cent in two years.

Finance Minister Charles Sousa announced the timetable, which is unlikely to please either the insurance industry or the opposition, on Friday.

Reducing auto insurance rates by 15 per cent was a condition set by the NDP when it agreed to support the Ontario budget earlier this year.

NDP transportation critic Gilles Bisson says auto insurance companies have profited by billions from legislation that reduced payouts for personal injuries. He says those savings were never passed on to the consumer.

"That's why in the budget we said we need 15 per cent. We need it now — it has to be done this year," he said ahead of the announcement.

Most Ontario drivers say their insurance costs are too high, with rates rising rapidly over the past few years even for drivers with 25 years accident free.

Randy Carroll of the Insurance Brokers Association of Ontario welcomes a rate reduction, but says the government must first crack down on insurance fraud.

Fraud is costing the industry $1.5 billion annually, he said. Among the scams are dishonest medical clinics that use a patient's information to file false claims and tow truck drivers who work with repair shops to falsify repair bills.

"If we get the rates down before the fraud is out of the system it will just put undue pressure on insurers and will end up putting undue pressure on consumers," he told CBC News.

Industry organization Insurance Bureau of Canada was critical of the province for expecting insurers to lower premiums while taking no steps to lower costs.

"While the government has approved insurance rate reductions they still haven't outlined how they will address some key cost reforms we need to see implemented," IBC vice-president Ralph Palumbo said. "Reducing costs is the only way to reduce premiums."

He claimed steps the government had taken in 2010 to combat fraud, including licensing health care clinics, are not yet producing savings. Palumbo said the IBC hopes to work with the government to bring costs down.

Auto insurance rates are determined by individual insurers using a combination of factors including driving experience, driving record, use and location of the vehicle, the type of vehicle driven, and amount of coverage and deductibles selected.

But Ontario's Superintendent of Financial Services reviews rates proposed by every company and the Financial Services Commission of Ontario regulates auto insurance to ensure protection for drivers.

The FSCO will likely enforce Ontario's mandated rate reductions. Ontario drivers won't see the new rates kick in until they renew their policies.

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Maple Leaf shares soar after it sells rendering unit

Shares in Maple Leaf Foods Inc. soared more than eight per cent Friday after the company announced it was selling its Rothsay business unit to a Texas-based company.

The Rothsay business operates six rendering plants and a biodiesel plant employing a total of 550 people in four provinces.

The rendering plants in Manitoba, Ontario, Nova Scotia and Quebec recover fats and proteins produced as a byproduct of the slaughtering process. The biodiesel plant in Quebec creates products for use as fuel.

Maple Leaf says the Rothsay employees will transfer to the new owner, Darling International Inc. of Irving, Texas.

Toronto-based Maple Leaf will receive about $645 million for Rothsay and use the money to pay down corporate debt.

On the Toronto Stock Exchange, Maple Leaf shares closed up $1.05, or 7.84 per cent at $14.44 in afternoon trading Friday.

"The sale of our rendering and biodiesel business supports our strategy to focus on effective capital deployment and profitable growth in the consumer packaged foods market," said Michael McCain, president and CEO.

"We are delighted to have concluded almost a year-long process with an agreement with Darling, the North American leader in food waste recycling."

Randall Stuewe, chairman and CEO of Darling International, said: "We look forward to joining forces with Rothsay's management team and employees and to the opportunity this brings our shareholders for future growth."

Maple Leaf Foods is a meat and bakery company which employs some 19,500 people at its operations across Canada and in the United States, the United Kingdom and Asia. It had sales of $4.9 billion in 2012.

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Microsoft CEO Steve Ballmer to retire within a year

Microsoft CEO Steve Ballmer, who took over the helm of the world's largest software company from founder Bill Gates, will retire within the next 12 months.

Microsoft Corp. did not name a successor. The company said it is forming a search committee, which will include Gates, and Ballmer will stay on until a replacement is found.

"There is never a perfect time for this type of transition, but now is the right time," Ballmer said in a statement released by the Redmond, Wash., company.

Microsoft shares shot up eight per cent in morning trading following the news. They closed the day up $2.38 US or 7.35 per cent at $34.77 US.

It's been less than two months since Microsoft announced a sweeping reorganization of its business in an attempt to reignite competition with faster-moving rivals such as Apple and Google.

Scrambling to transform business

Response to the newest version of Microsoft's flagship Windows operating system has been lukewarm. And Microsoft, along with other companies that thrived in the era of personal computers, are scrambling to transform their businesses as people come to rely more and more on smartphones and tablets.

In his statement, Ballmer noted that the company is moving in a new direction and needs a CEO that will be there for the longer term.

Microsoft, he added, "has all its best days ahead."

Ballmer, 57, met Microsoft founder Bill Gates in 1973 while they were living down a dormitory hall from each other at Harvard University. He joined Microsoft in 1980 to bring some business discipline and salesmanship to a company that had just landed a contract to supply an operating system for a personal computer that IBM would release in 1981.

Ballmer worked at Microsoft for 33 years

Ballmer, a zealous executive prone to arm-waving and hollering, did the job so well that he would become Gates' sounding board and succeed him as CEO in 2000. He has worked at Microsoft for 33 years, matching the tenure of Gates, who left the company in 2008.

"It's a tad surprising, but every other business head has been rotated out," said BGC Financial analyst Colin Gillis. "They swapped out all their segment heads over the past few years. The only one they haven't changed is the CEO."

Though investors cheered the news on Friday, Gillis cautioned that it could be a "tough 12 months" for the company.

The obvious successor — former Windows head Steven Sinofsky — got booted by Ballmer, he said.

Sinofsky left the company shortly after the launch of Windows 8 last year.

Ballmer has been praised as a top salesperson and executive, who doubled Microsoft profits.

But many fault him for missing the importance of the mobile internet allowing Apple, Blackberry and Google to take the lead, with smartphones and tablets. He also presided over the botched launch of Windows 8.

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