RBC, TD earnings help drive TSX higher; golds slip
By John Tilak and Alastair Sharp
TORONTO (Reuters) - Forecast-topping quarterly results from Royal Bank of Canada (RY.TO: Quote) and Toronto-Dominion Bank (TD.TO: Quote), the country's two biggest banks, helped drive Canada's main stock index higher on Thursday, overcoming weakness in gold miners.
The market was also supported by positive economic data from the United States, Canada's biggest trade partner, which spurred gains in oil and gas and industrial shares.
Royal Bank rose 0.9 percent to C$64.02 after it reported a 12 percent rise in quarterly profit on the back of stronger loan growth and capital markets income, prompting the bank to raise its dividend by 5 percent.
"It seems that the overall message is that everything is peachy rosy," said Levente Mady, a senior portfolio manager at PI Financial Corp in Vancouver. "The earnings are there and the momentum is there. It's hard to argue with that."
Some analysts have been wary about the prospects for gains in bank stocks due to some weakness in the Canadian economy and because the index's financial services sector was already up about 5 percent this year.
"Despite concerns about the housing slowdown in Canada, the leveraged consumer and the potential fall in consumer spending, these banks are still reporting pretty healthy numbers," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.
He argued, however, that the rally in bank shares has made valuations expensive, and investors might do well to take profits.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed up 89.44 points, or 0.70 percent, at 12,821.83. Eight of the 10 main sectors on the index were higher. Continued...