TSX inches up as worries on U.S. budget deal loom
By Cameron French
TORONTO (Reuters) - Canada's main stock index rose slightly in thin trade on Friday as investors remained worried about the looming "fiscal cliff" in the United States, but insurance and energy shares rose.
Stocks pared gains after U.S. President Barack Obama said any deal with Congress to avert a fiscal crisis must come with higher taxes on the wealthiest Americans, suggesting an agreement to avoid automatic tax hikes and spending cuts is not imminent.
"The market is not focusing on Europe right now. The market is focusing on what's going on in America. That's the only leg in the stool that's keeping everything together right now," said John O'Connell, chief executive of money manager Davis Rea.
Investors fear that if lawmakers cannot reach a compromise on reducing the U.S. budget deficit, the $600 billion in automatic spending cuts and tax rises scheduled to kick in beginning in January will drive the United States back into recession.
Five of the 10 TSX subgroups finished higher, as strong oil prices helped drive a 0.24 percent rise in energy shares, while insurers led the heavily weighted financials sector 0.48 percent higher.
Sun Life Financial SLF.TO rose 3.3 percent to C$26.14, while Manulife Financial (MFC.TO: Quote) climbed 3.1 percent to C$12.18 after both insurers released stronger-than expected third-quarter results this week.
Weighing on the index was the materials group, which fell 0.85 percent as gold miners gave up some of their gains from earlier in the week.