TSX rallies on banks, falls 6.3 percent in May

Thu May 31, 2012 5:54pm EDT
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By Jon Cook

TORONTO (Reuters) - Toronto's main stock index rallied on Thursday, led higher by financial issues on strong second-quarter bank earnings and as oil and gold shares pared earlier losses.

However, the index still recorded its largest monthly drop, falling 6.3 percent since September as commodity markets were rattled in May by an escalation in the euro zone debt crisis.

Nine of Canada's 10 main sectors finished higher, led by the financial group, which jumped 1.5 percent on better-than-expected second-quarter results from Canadian Imperial Bank of Commerce (CM.TO: Quote) and National Bank of Canada (NA.TO: Quote). [ID:nL1E8GVA7W]

Shares of CIBC, Canada's No. 5 bank, jumped 2.5 percent to a two-week high at C$72.07 after the company reported a 6 percent increase in net profit due partly to higher loan volumes. Smaller rival National Bank's shares edged up 0.7 percent to C$73.66 after it said core profit rose 6 percent and increased its quarterly dividend by 5 percent.

Royal Bank of Canada (RY.TO: Quote) shares led the sector's gains, rising 1.8 percent to C$51.55.

"That's been one of the few bright spots on the TSX," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver. "That's giving an element of support to the TSX, because the other two major groups - materials and energy - have literally fallen off a cliff."

For the month the materials index .GSPTTMT, which includes miners, shed 7.3 percent, while the oil and gas sector plunged 11.9 percent.

On Thursday, both groups were flat, with materials down 0.1 percent and energy up by the same amount.   Continued...

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch