Governor Mark Carney noted that the central bank only last
month said there’s ultimately a need for some withdrawal of
monetary policy stimulus, though the prospect was “was less
imminent.”

“Obviously we stand by that assessment,” he told reporters
after a speech in London, Ontario.

Some economists last week pushed their forecasts for the
timing of the next Canadian rate hike further into the future
after data showed the economy registered its lowest inflation in
more than three years last month and retail sales sank in
December.

Canadian interest rates are at a near-record low 1 percent.
The Bank of Canada has said since early last year its next move
is likely to be a rate increase, making it the only Group of
Seven central bank with a tightening bias.

The weak data prompted some speculation the central bank
could drop the tightening bias. But Carney’s comments seemed to
suggest the bank favors the status quo for now, said Benjamin
Reitzes, a senior economist and foreign exchange strategist at
Bank of Montreal

“He still said that rates will still eventually have to go
higher … there’s no reason to believe they’re going to change
things materially at this point,” said Reitzes.

The bank last month slashed its fourth-quarter annualized
growth forecast to 1.0 percent from 2.5 percent. But Carney said
on Monday this might now also be too optimistic, citing the
emergence of downside risks the bank had identified.

“I don’t want to overemphasize shorter-term data, but there
is a bit of that bias and I would say that, particularly around
the fourth quarter of 2012, we’ll find out shortly, but it might
be slightly softer than we had forecast,” he said.

Statistics Canada will release figures for fourth quarter
growth this Friday.

Carney said one reason for the likely lower growth was an
unexpectedly weak export sector, which is suffering from what he
called a “competitiveness element.”

Exporters are struggling to cope with a strong Canadian
dollar and soft demand, particularly from the United States.

The Group of 20 leading economies has made progress in
financial reforms which will go a long way, but these alone will
not be sufficient, he said in a speech to business students at
Western University in London, Ontario.

“Virtue cannot be regulated. Even the strongest supervision
cannot guarantee good conduct. Essential will be the rediscovery
of core values, and ultimately this is a question of individual
responsibility,” Carney said.

The lack of trust in major banking systems “deepened the
cost of the crisis and is restraining the pace of recovery,” he
said in the prepared text of his speech, which made no mention
of Canada’s economic or interest rate outlook.

“There is a growing suspicion of the benefits of financial
deregulation and cross-border financial liberalization, a
suspicion that could ultimately undermine support for free trade
and open markets more generally,” he said.

Carney said progress in the G20′s financial reforms was “not
yet fully reflected in market valuations or public attitudes,”
lamenting that the good work done so far had been overshadowed
by a spate of scandals including rigging Libor interest rates.

Reduced trust in the financial system has increased the cost
and lowered the availability of capital for non-financial firms,
with access to credit remaining strained despite the massive
response of central banks, he said.

Carney, who will leave Ottawa to become governor of the Bank
of England in July, spoke of the risk of the balkanization of
the banking system as some supervisors try to ring-fence bank
subsidiaries in their own jurisdictions to make sure they are
resilient on a stand-alone basis.

Ironically these efforts would reduce systemic resilience
globally, and if left unchecked could substantially decrease the
efficiency of the global financial system, he said.

Ontario, Canada’s richest province, kicked off its new
legislative session with a traditional speech from the throne
that outlined the priorities of Premier Kathleen Wynne’s
government that could soon face a vote of confidence.

“For the benefit of the entire province, your government
intends to work with opposition parties, in a spirit of renewed
cooperation, to get the people’s business done,” said
lieutenant-governor David Onley in a ceremonial speech.

“It does not believe that we are irreparably divided.”

Wynn became the first female premier and first openly gay
leader of a Canadian province in January, replacing Dalton
McGuinty who stepped down amid controversy over costly
cancellations of two natural gas power plants and battles to
freeze teacher wages.

Canada’s four most powerful provinces are led by women.
British Columbia, Alberta and Quebec have female premiers, while
women are also at the helm in Newfoundland and Labrador and in
the thinly populated Arctic territory of Nunavut.

In the speech, the government reiterated its pledge to
restrain spending and eliminate the deficit by 2017-2018.

“And after that, it will restrict overall spending increases
to one per cent below GDP growth until the province’s
debt-to-GDP ratio returns to the pre-recession level of 27 per
cent,” Onley said.

Ontario will continue to promote renewable energy and work
to end coal-fired energy generation in the province.

The center-left Liberals have been in power for nine years
in Ontario, Canada’s most populous province and home to most of
Canada’s banks and a large part of its manufacturing sector. But
the party lost seats in the 2011 provincial election and needs
support from at least one other party to stay in power.

The left-leaning New Democrats are the natural ally for
Wynne, who has a reputation for seeking compromise and is viewed
as being to the left of other Ontario Liberals.

The Liberals are facing a C$12 billion ($12 billion) budget
deficit. They have vowed to curb growth in spending, as modest
economic growth hurts revenues, and say it will take five more
years to balance the budget.

Ontario accounts for roughly 40 percent of Canadian gross
domestic product and is among the largest sub-national borrowers
in the world, issuing bonds worth nearly C$35 billion in 2012.

Chief Theresa Spence, from a remote northern Ontario
reserve, ended the strike after holding negotiations with other
aboriginal leaders and opposition lawmakers in the Canadian
Parliament.

“There was an awakening here,” Danny Metatawabin, a
spokesman for Spence, told a news conference in Ottawa. “Now we
have to move forward.”

“The fight does not end because the hunger strike ends.”

Spence, who survived on a liquid diet while living in a
tepee, was hospitalized for observation and could be released
later today or Friday, Metatawabin said.

Spence traveled to Ottawa from her remote northern Canadian
reserve in December and set up camp on an island in the Ottawa
River in view of Parliament to raise awareness about poor living
conditions for natives across Canada.

She was a flashpoint in a boisterous Canadian aboriginal
protest movement called “Idle No More.” It began with four women
in the province of Saskatchewan turning to Twitter and other
social networks in a bid to rally North American natives.

They were protesting legislation by Canada’s Conservative
government that they say promotes resource development while
reducing environmental protection for lakes and rivers on their
lands.

“These acts, these bills, they will kill us,” said Raymond
Robinson, an aboriginal elder from Manitoba who also ended a
six-week hunger strike on Thursday. “We just need our equal
opportunities.”

Ottawa spends about C$11 billion ($11.1 billion) a year on
its aboriginal population of 1.2 million. But living conditions
for many are poor, and some reserves have high rates of poverty,
addiction, joblessness and suicide.

Canadian native groups staged a day of action earlier this
month with protests that included blocking a rail line and
slowing traffic across an Ontario-to-Michigan bridge crucial to
U.S.-Canadian trade.

(Reporting By Russ Blinch; Editing by Xavier Briand)

Hundreds of natives, some wearing colorful dress and banging
drums, blocked an access road leading to the Ambassador Bridge,
according to the Globe and Mail, slowing traffic on a major
trade artery that connects Windsor, Ontario, with Detroit,
Michigan.

Thousands of commercial trucks cross the bridge daily,
carrying approximately 25 percent of the goods traded between
the two countries, which form the world’s largest trading
partnership.

Under the banner of “Idle No More,” native groups promised
to hold a series of protests to draw Ottawa’s attention to poor
living conditions and high jobless rates facing many of Canada’s
1.2 million natives.

A native protest shut down a rail line that carries
passenger and freight traffic west of Winnipeg in the western
province of Manitoba, according to a spokesman for Canadian
National Railway Co.

Native groups complain that Canada has ignored treaties
signed with British settlers and explorers that they say granted
native peoples significant rights over their territory.

Canadian Prime Minister Stephen Harper agreed to pay more
attention to the demands of First Nations groups in a meeting
last week with aboriginal groups.

Ottawa spends about C$11 billion ($11.1 billion) a year on
its aboriginal population, but living conditions for many are
poor and some reserves have high rates of poverty, addiction,
joblessness and suicide.

Native leaders also want Ottawa to rescind parts of recent
budget legislation that they say reduces environmental
protection for lakes and rivers.

Canadian Finance Minister Jim Flaherty said on Wednesday it
would not be “desirable” if the protest damaged the economy.

“This is not a time to have even more challenges to the
Canadian economy,” he told reporters on Wednesday.

The government said it will improve water systems in more
than 50 First Nation communities on reserves where residents
often complain of deplorable infrastructure and housing.

“Our Government is committed to addressing water and
wastewater issues on reserves to ensure that First Nations
communities have access to safe drinking water,” Aboriginal
Affairs Minister John Duncan said in a statement.

The announcement followed a meeting between Canadian native
leaders and the federal government on Friday, where Canadian
Prime Minister Stephen Harper agreed to pay more attention to
the demands of First Nations groups.

Under the banner of “Idle No More,” native groups have been
blocking roads and railways as well as staging hunger strikes to
protest conditions on the reserves.

Some native chiefs have warned that the aboriginal protest
movement was prepared to damage the economy unless Ottawa
addressed the poor living conditions and high jobless rates
facing many of Canada’s 1.2 million natives.

Native groups complain that Canada has ignored treaties
signed with British settlers and explorers that they say granted
native peoples significant rights over their territory.

Ottawa spends about C$11 billion ($11.1 billion) a year on
its aboriginal population, but living conditions for many are
poor and some reserves have high rates of poverty, addiction,
joblessness and suicide.

Gordon Peters, grand chief of the association of Iroquois
and Allied Nations in Ontario, threatened last week to “block
all the corridors of this province” this Wednesday unless
natives’ demands were met. Ontario is Canada’s most populous
province as well as its financial and industrial hub.

Native leaders also are demanding Ottawa rescind parts of
recent budget legislation that they say reduce environmental
protection for lakes and rivers. The most recent budget act also
makes it easier to lease lands on the reserves where many
natives live, a change some natives had requested to spur
development but which others regard with suspicion.

Tom Mulcair, leader of the opposition New Democratic Party,
said the government needed to take notice of the demands by
native groups.

“There is a strong grassroots movement, and we ignore that
at our own risk and peril, Mulcair told CTV News on Sunday.

Education Minister Laurel Broten announced contract terms
covering some 130,000 teachers that included a broad wage
freeze, a reduction in the number of sick days and limits on the
number of sick days teachers are allowed to cash out when they
retire.

Ontario’s Liberal government, which holds only a minority of
seats in the provincial parliament, managed to reach tough new
deals with other teacher groups and its doctors but failed to
come to terms with the larger group of elementary and secondary
school teachers.

The showdown led many teachers to drop extracurricular
activities and take other job action such as one-day strikes.

The new deal will save the province C$250 million ($253.79
million) in 2012-13 and C$540 million in 2013-14, the government
said in a statement. In addition, the government will realize
one time savings of C$1.1 billion from changes to the sick day
policy.

The new contracts will expire in August, 2014.

Ontario Premier Dalton McGuinty, who announced late last
year that he would resign once the Liberals elect a new leader
in January, pledged last March that the government would reduce
its C$14 billion deficit by holding the line on public sector
wages.

The government passed a law last fall covering its public
sector workers that froze wages, cut sick days and limited their
right to strike. The legislation, which sparked furious
opposition from labor groups, set the bargaining deadline for
last Dec. 31.

Ontario’s teachers are among the highest paid in Canada, a
country where educators rank as some of the best compensated in
the world.

Credit rating agencies have repeatedly warned Ontario that
tackling its deficit would require tough austerity measures.

Healthcare and education make up about 70 percent of
Ontario’s spending, with wages and fees accounting for more than
half of the expenses.

To the south, a mass of steel-and-glass skyscrapers glinted in the bright autumn sun. Several cranes were in motion on unfinished buildings, a common sight in a city in the midst of a residential building boom.

“If you look around the core, every building you look at has a different look to it, a different ambience,” said the energetic co-founder of Lanterra Developments, one of the city’s most active builders. “That’s important.”

Fenton, 56, says he is confident the city’s condominium market will remain strong — despite warnings that it is all moving too far, too fast — and has an ambitious line-up for future development. And he is not alone in his optimism.

Toronto’s seams are bursting with new condo and hotel towers designed by star architects like Frank Gehry and built by famed developers like Donald Trump.

But Fenton and others who see Toronto emerging from its “pokey” past — as a columnist in the Globe and Mail recently described it — face some formidable obstacles: an infrastructure buckling under soaring density rates, the laws of supply and demand and preservationists who says too many new towers are destroying the city’s character.

Canada’s central bank drew a bead on the city of 2.6 million this month in its weighty “Financial System Review,” warning of “potential future supply imbalances” in the condo market.

The Bank of Canada noted that the number of unsold condominiums in pre-construction has doubled, to 14,000, over the past year.

Greater Toronto home sales have slowed after years of steady increases. Sales fell 16 percent in November from the same month a year ago, according to the Toronto Real East Board. So far, however, prices are flattening, not falling, as some analysts have predicted.

In defiance of warnings by the central bank and economists, two mega-projects were unveiled within days of each other in October — a three-tower condo complex to be designed by Gehry and a multi-tower office project that includes a massive casino.

RACE TO THE TOP

More skyscrapers — 147 of them — are being built in Toronto than anywhere in North America, according to Emporis, the German data provider. That is twice as many as in New York, a city with about three times the population.

Toronto is getting taller fast. Fifteen buildings that will be more than 150 meters (492 feet) high are under construction, more than anywhere in the western hemisphere.

The recently completed Trump International Hotel topped out at 277 meters, just shy of Toronto’s tallest skyscraper, the 72-story First Canadian Place, which is 298 meters. That height could be exceeded by a couple of major projects on the drawing boards, including the Mirvish project.

(The city’s tallest freestanding structure, however, is the CN Tower, which soars over Toronto at 553 meters.)

“Toronto is creating a very sustainable future by building condos downtown,” said Daniel Libeskind, the American architect, who was in Toronto in October for a ceremony for one of his latest projects, the 57-story L Tower, with its sweeping, curvaceous, design that rises above the city’s modernist Sony Center for Performing Arts.

“It fights urban sprawl and brings people into the heart of the city.”

While building in big American cities and in Western Europe cratered following the financial crisis four years ago, Toronto never stopped booming. Demand for residential space has been strong, and while the office market has also been healthy, most of the new developments have been for condo projects.

Lanterra’s Fenton said his company has built some 9,000 condominium units in Toronto over the past 10 years and now has “in the hopper” up to 6 million square feet of property in downtown Toronto that is being rezoned for new projects.

Lanterra gained prominence over the past five years for the development of Maple Leaf Square, which included two condo towers, a hotel and office space, near the city’s hockey shrine, Air Canada Center, on land that had sat vacant for years.

Now it is “one of the hottest places to be,” said Fenton.

“ONE TOWER LEADS TO ANOTHER”

Some worry that Toronto can’t handle much more development.

“We have accumulated a serious infrastructure deficit,” wrote Ken Greenberg, a Toronto architect, in the Globe and Mail in October. ” W e have failed to make the investments in public transit that are urgently needed. Our narrow sidewalks and poorly designed streets are already jammed.”

He criticized the city officials and developers for a lack of coordinated planning. “One tower leads to another,” he said.

Despite decades of debate about transportation policy, Toronto has just two subway lines, a fleet of charming but lumbering streetcar lines and crumbling roadways.

Commuters in Toronto spend at least 80 minutes in traffic a day, on average — worse than what commuters face in London or Los Angeles — according to the Toronto Board of Trade.

Toronto’s City Planning Department did not respond to numerous requests for comment.

There is also concern about soaring neighbourhood density rates. The city’s waterfront area has seen the most growth. Its population has soared 134 percent in a decade and is up 66 percent in the past five years, to 43,295, according to city data.

Toronto’s aging energy grid is strained. In July, downtown Toronto endured an eight-hour blackout after a transformer blew due to high demand. There was a similar outage last January.

THE MEGA-PROJECTS

Now two of the most ambitious projects the city has ever seen are being floated.

First out of the gate was theatre impresario David Mirvish, who with his father, the late Ed Mirvish, helped create Toronto’s vibrant arts and theatre scene.

In early October, Mirvish unveiled a plan for three condominium towers, with up to 85 floors each, that would be the city’s tallest buildings.

A podium at the buildings’ base would house two museums, including one for the Mirvish family’s contemporary art collection.

The Mirvish buildings would be designed by Gehry, the celebrated Canadian-born architect whose 76-story 8 Spruce Street residential tower was just completed in New York.

“These towers can become a symbol of what Toronto can be,” the 83-year-old Gehry said at project’s unveiling. “I am not building condominiums, I am building three sculptures for people to live in.”

Two weeks later, Oxford Properties Group, a Canadian developer with a $20 billion global real estate portfolio, announced a $3 billion makeover of the downtown convention center, just south of the Mirvish and Gehry project. It envisions a casino, two hotel towers and two office towers that would be among the tallest in the city.

Adam Vaughan, a city councillor whose district would encompass both projects, said a lot more planning is needed. He had kinder words for the Mirvish proposal — “it’s a transformative and astonishing proposal” — than for Oxford’s project, which he called “all out of proportion.”

“It’s time to have a really smart conversation about how we are building this neighbourhood because there is a hell of lot of density arriving not just with this project but with all the projects that have been approved,” he said in an interview.

AT THE KIT KAT

Al Carbone, owner for the past three decades of the Kit Kat restaurant, doesn’t think people like Vaughan are listening to him, as the councillor and other politicians are not heeding the growing concerns about the rapid pace of development.

He said buildings are springing up too close to lot lines, creating jammed sidewalks and alleyways. And the sun does not shine on the streets like it once did.

He supports the Mirvish project, which would preserve his street, known as Restaurant Row. But he is battling a separate 47-story building that would go up steps away from his restaurant.

The plan, which still must be approved, would retain the historic facades of buildings on the street, which Carbone believes will destroy the character of the row.

“It’s a tough battle,” said Carbone, who launched the website SaveRestaurantrow.com to drum up support in opposition to the project. “You can’t have a condo on every corner.”

WHERE IS TORONTO HEADED?

Some believe Toronto is at a crossroads as developers, politicians and citizens debate the rapid changes the city’s urban landscape.

The Globe and Mail’s Marcus Gee dismissed the idea that the development was somehow bad for the city in a column in October, saying the condo boom “has transformed our once-pokey downtown into a vibrant, around-the-clock urban community.”

David Lieberman, an architect who also teaches at the University of Toronto’s architectural school, agrees the new developments have been good for the city, but he is not sure the city’s citizens are ready for it.

“We have such an excellent opportunity to get things right, but there is the Canadian conservatism,” Lieberman said, sipping coffee in his studio in an old downtown Toronto house. “Canadians in their city building are not risk takers.”

(Reporting By Russ Blinch. Editing by Janet Guttsman and Douglas Royalty)

Defending the $15.1 billion takeover of Nexen, one of Canada’s largest independent oil companies, in the face of grumbles from the left, Paradis said that Canada won “significant undertakings” from CNOOC.

Canada announced on Friday that, after months of study, it would allow CNOOC’s $15.1 billion acquisition of Nexen Inc, a controversial ruling given concerns from some in the ruling Conservative party about China’s human rights record.

Paradis said CNOOC made promises involving the management of Nexen and that the Chinese company would have report back to the Industry Ministry to ensure conditions are being met.

Canada made “sure that we had significant undertakings in terms of governance, about transparency, about disclosure,” Paradis told CTV’s “Question Period” program.

Paradis said he could not provide details for commercial reasons.

Under the deal, CNOOC will get full control of Nexen’s Long Lake oil sands project in northern Alberta, properties containing as much as six billion barrels of recoverable crude and a 7.2 percent stake in the Syncrude Canada Ltd joint-venture.

The ruling, closely watched by investors, followed months of heated debate over how much of Canada’s energy sector, and especially its oil sands, should be absorbed by companies run by other governments.

Opposition leader Thomas Mulcair said the only clear winners in the deal were oil company shareholders.

“The only clear net benefit is to Nexen shareholders in Mr. Harper’s oil patch,” Mulcair, leader of the New Democratic Party, said in an interview on Global TV’s “The West Block.” “I think it has as much to do with that as anything else.”

The Nexen deal is the largest successful foreign takeover ever by a Chinese company. Separately, Ottawa on Friday also gave the green light for the purchase of Progress Energy Resources Corp by Petronas of Malaysia.

Prime Minister Stephen Harper served notice, however, that future investments by state-owned enterprises would face much tighter scrutiny.

Paradis reiterated Harper’s statement that it was time to “draw a line” against any further encroachment by foreign state-run enterprises in the oil sands, which are the world’s third largest oil resource after those in Saudi Arabia and Venezuela.

Analysts said the Canadian government’s announcement brought some clarity to the market, which could help boost the already strong Canadian dollar.

“It does show a willingness from Canada’s government to encourage foreign investment which speaks to a longer-term interest into the Canadian dollar,” said David Tulk, chief Canada macro strategist at TD Securities.

The Harper government said it would still welcome non-controlling minority investments by state-run enterprises in Canadian companies, while insisting that the door remains open to private-sector firms.

Two years ago Canada had rejected BHP Billiton’s $39 billion bid for Potash Corp, on the grounds that it was not in Canada’s net interest.

CNOOC will also acquire Nexen’s 43 percent stake in the Buzzard field in the North Sea, the most important contributor to the crude blend used to set the Brent crude price that serves as the international oil price benchmark.

Nexen also has oil production from Yemen, offshore West Africa and the Gulf of Mexico.

Petronas offered C$5.2 billion ($5.3 billion) for Progress, a mid-size gas producer.

Nexen shares fell 6.3 percent to C$23.29 on the Toronto Stock Exchange on Friday, before the announcement was made. . Nexen’s New York-listed shares surged in after-hours trading. Progress fell 88 Canadian cents, or 4.4 percent. to C$19.37.

($1=$0.99 Canadian)

(Additional reporting by Euan Rocha and Alastair Sharp; Editing by Leslie Adler)

Will Ferguson won the C$50,000 ($50,000) Scotiabank Giller
prize for his novel “419,” published by Penguin Canada.

“I’d like to raise a toast to the written word,” Ferguson,
said in his acceptance speech as he drank from a flask at the
podium.

Besides the cash prize, the award will likely to lead to a
sharp boost in sales for the novel that is about a woman who
hunts for those she believes are responsible for her father’s
death.

The winner was chosen from a short list that included Alix
Ohlin for “Inside,” Nancy Richler for “The Imposter Bride,” Kim
Thúy for “Ru” and Russell Wangersky for “Whirl Away.”

In its 19th year, this year’s Giller winner was chosen by a
three-member jury: the Irish author Roddy Doyle, the Canadian
publisher and essayist Anna Porter and the American author Gary
Shteyngart.

Ferguson’s book was called a “fast-paced, impeccably plotted
thriller that investigates the world of Nigerian email scams,”
by Globe and Mail critic John Barber, who had predicted the book
was the odds on favorite to win.

In the run-up to the competition the Giller jury extolled
Ferguson as a “true travel writer” who was attuned to detail as
well as dialogue and suspense.

“It is tempting to put “419″ in some easy genre category,
but that would only serve to deny its accomplishment and its
genius,” the jury said.