Banks unable to keep TSX from lower close

Tue Aug 28, 2012 5:02pm EDT
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By Alastair Sharp

TORONTO (Reuters) - Despite a rise in financial shares spurred by solid quarterly results and a dividend increase from Bank of Montreal, Canadian stocks slipped on Tuesday as a recent market rally showed signs of fatigue.

The financial group was the only one of the 10 main sectors on the Toronto exchange's benchmark index to rise. Energy and materials stocks weighed heavily.

The market has been rallying on hopes for stimulus measures from the U.S. Federal Reserve, the European Central Bank and other central banks.

That rally was "in advance of the Fed and on the back of expected bond purchases from the ECB and helped by the recent rally in commodity markets, but the market is consolidating those gains now," said Fergal Smith, managing market strategist at Action Economics.

Shares in Bank of Montreal (BMO.TO: Quote) ended 0.4 percent higher at C$57.93 after the lender reported a 37 percent jump in quarterly profit, topping expectations, and raised its quarterly dividend for the first time in five years.

Three of Canada's five main banks featured among the top five positive influences on the index. Leading the charge were Royal Bank of Canada (RY.TO: Quote) and Toronto Dominion Bank (TD.TO: Quote) which, along with Canadian Imperial Bank of Commerce (CM.TO: Quote), report quarterly earnings on Wednesday.

Bank of Nova Scotia (BNS.TO: Quote) gained early in the session but ended flat at C$52.90 after it said the sale of its corporate headquarters in Toronto helped it post a 57 percent rise in third-quarter profit. It also raised its dividend.

"Banks are living up to their reputation of regular dividend increases and sharing the wealth with their shareholders," said Fred Ketchen, director of equity trading at ScotiaMcLeod.   Continued...

People walk past an electronic board displaying the midday TSX index in Toronto February 16, 2011. REUTERS/Mark Blinch