TSX ends flat as surging banks offset by falling resources

Wed Aug 29, 2012 5:13pm EDT
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By Alastair Sharp

TORONTO (Reuters) - Canada's main stock index closed flat on Wednesday as a drop in resource stocks on fears about the global economic outlook offset another day of gains by country's biggest banks following strong earnings on Tuesday.

Banks and insurers accounted for six of the top ten gainers on the index. Investors digested news of higher profits and dividend increases from two banks on Tuesday and bet on more pleasant surprises as the rest of the cohort report.

Royal Bank of Canada (RY.TO: Quote), Toronto Dominion Bank (TD.TO: Quote) and Canadian Imperial Bank of Commerce (CM.TO: Quote) all report earnings on Thursday.

Bank of Nova Scotia (BNS.TO: Quote) shares ended 1.3 percent higher at C$53.60, the single biggest positive influence on the index. After the bell, the lender announced it would acquire ING Groep's ING.AS Canadian online bank for C$3.1 billion.

Analysts said recent acquisition activity in the Canadian market also lent support.

"The economy is growing slowly like many other developed markets, but if you're a believer in the long-term story, the Canadian market is quite attractive," said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, Missouri.

Progress Energy Resources Corp (PRQ.TO: Quote) shareholders approved an almost C$6 billion bid from Malaysia's state oil company Petronas. The shares had already jumped to near that price tag after Petronas made the offer.

Ottawa said it is formally reviewing another Asian takeover deal for a Canadian resource company, the $15.1 billion bid for oil firm Nexen Inc NXY.TO from Chinese state-owned oil company CNOOC Ltd (0883.HK: Quote). Nexen shares edged higher.   Continued...

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