TORONTO (Reuters) - Canada's main stock index fell on Thursday as weakness in financial and gold-mining stocks overshadowed a jump in Canadian Tire Corp (CTCa.TO) after the retailer unveiled plans to launch a real estate investment trust.
Investors also tracked data showing U.S. jobless claims unexpectedly fell in the latest week, dropping to the lowest level in more than five years. That news, coupled with a stronger U.S. dollar, weakened bullion prices and weighed on gold shares. <GOL/>
Thursday's drop pulled the Toronto Stock Exchange's benchmark index off the one-month high it hit in the previous session, and it also ended, as did U.S. stock markets, a five-day winning streak.
"It's not a surprise that there is a pause now; maybe there is some consolidation going on," said Shailesh Kshatriya, senior investment analyst at Russell Investments Canada.
The benchmark S&P/TSX composite index .GSPTSE closed down 41.15 points, or 0.33 percent, at 12,543.90. Six of the 10 main sectors on the index ended higher.
Canadian Tire said it will create a C$3.5 billion ($3.5 billion) REIT through an initial public offering in the fall of 2013, sending its shares up 11.2 percent.
"It's a marvelous time," said John Ing, president of Maison Placements Canada. "There's no question that there is demand, and there is no question that they have lots of real estate."
"There is a desperation for yield," he added. "These chains have been sitting on classic real estate, and they're offering yield in a yield-hungry market."
Grocer Loblaw Companies Ltd (L.TO) announced a similar plan in December, saying it will spin off the vast majority of its property assets to create one of Canada's biggest REITs.
Financials, the index's most heavily weighted sector, gave back 0.8 percent and were the biggest drag on the market on Thursday. Among them, Royal Bank of Canada (RY.TO), the country's biggest bank, fell 0.8 percent to C$61.62.
Insurer Sun Life Financial SLF.TO was down 1.2 percent at C$29.23 after it reported a 25 percent drop in first-quarter profit on Wednesday, hurt by less favorable financial markets than in the year-before period.
Russell's Kshatriya said he is cautious on the prospects for the TSX due in part to the outlook for financials.
"The trend for households will be to de-lever, be more cautious about their spending, and the housing sector is slowing down. All those will weigh on financials," he said.
The index's materials sector, which includes mining stocks, declined 0.7 percent. Barrick Gold Corp (ABX.TO) fell 2.1 percent to C$21.06.
The gold-mining group, which suffered a huge selloff last month, is down about 34 percent on the year.
Kshatriya said that while the gold sector could still be challenged, the valuations were becoming more appealing.
"If there is one sector on the TSX that has some value, it could very well be the gold sector," he said. "But it is not for the faint of heart."
In other company news, Bombardier Inc (BBDb.TO) said its CSeries jetliner was on track to make its first flight in June and reported a 25 percent jump in first-quarter revenue on robust growth at its aerospace unit. The stock rose 5.7 percent to C$4.47.
Tim Hortons Inc THI.TO is likely to raise its debt levels and buy back shares but not to the extent that an activist investor is pushing for, Paul House, chief executive of the Canadian coffee-and-doughnut chain, told Reuters. The stock shed 2.4 percent to C$55.75.
Editing by Peter Galloway