Financial Update

· TSX -161.82pts (CP)A move away from commodities sent the Toronto stock market tumbling, pushed down by a retreat from oil and mining stocks and jitters about the health of the global economy. With 47% of the TSX related to commodities like oil and mining, this is a 6% drop in 2 days
· Dow +15.96pts
· Dollar +.67c to $94.25US .
· Oil -$.36 to $109.35US per barrel
· Gold -$2.30 to $802.70US per ounce

By Julian Beltrame, The Canadian Press OTTAWA - The Bank of Canada stuck to its guns on interest rates Wednesday, holding the overnight rate at 3% despite acknowledging that both inflation and the economy are weaker than previously projected. The central bank's decision to stay on the sidelines for the third consecutive announcement date had been widely predicted, but many economists were surprised governor Mark Carney didn't have a more "dovish" tone in his accompanying statement.

"He gave only the barest of scraps to the doves ... given the fact we've had one of the weakest half years for the economy since the (early) 1990s," said Douglas Porter, deputy chief economist with BMO Capital Markets. "There is absolutely no signal here whatsoever they are preparing to cut rates (in the future)."

GMAC to cut 5,000 jobs at mortgage unit

The Globe and Mail

NEW YORK — — GMAC LLC [GOM-N] said Wednesday it plans to cut 5,000 jobs at its Residential Capital LLC mortgage unit, or 60 per cent of that work force, and shut its 200 GMAC Mortgage retail offices to combat persistently weak housing and credit markets.

GMAC also plans to stop offering home loans through its Homecomings broker channel, and is evaluating strategic alternatives for its GMAC Home Services and non-core mortgage servicing businesses. It said it keep offering mortgages “where there is a secondary market to sell the loans.”

The cutbacks suggest deepening problems for GMAC's owners. A group led by private equity firm Cerberus Capital Management LP bought a 51 per cent stake from General Motors Corp [GM-N] in 2006. The automaker owns the remaining 49 per cent.

ResCap was the seventh-largest U.S. mortgage lender from January to June, making $35.7-billion (U.S.) of loans, according to the newsletter Inside Mortgage Finance. It said the latest job cuts will leave it with roughly 3,000 employees, down from a reported 14,000 at the beginning of 2007.

“While these actions are extremely difficult, they are necessary to position ResCap to withstand this challenging environment,” ResCap chief executive Tom Marano said in a statement. “We need to respond aggressively by further reducing both operating costs and business risk.”

GMAC is based in Detroit, and ResCap in Minneapolis.

ResCap has had seven straight unprofitable quarters, losing $7.2-billion over that time. In the April-June period, it lost $1.86-billion, while GMAC overall lost $2.48-billion.

ResCap expects 3,000 of the job cuts to take place this month, and a majority of the remainder by year end. It expects a $90-million to $120-million charge, and an additional charge for the other job cuts.