May 29, 2014 / 1:43 PM / 3 years ago

CIBC, RBC pull TSX lower; PrairieSky soars in debut

3 Min Read

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007.Mark Blinch

TORONTO (Reuters) - Canada's main stock index closed lower on Thursday, hurt by a decline in Canadian Imperial Bank of Commerce (CM.TO) after it reported quarterly results, while Royal Bank of Canada (RY.TO) and other major banks also fell.

A jump in Encana Corp (ECA.TO) spinoff PrairieSky Royalty Ltd (PSK.TO), which had its trading debut, helped inject some optimism into the market. Its initial public offering was the second biggest in Canadian history.

The stock closed at C$37. Encana said it sold 52 million PrairieSky shares priced at C$28 to a group of underwriters led by TD Securities Inc and CIBC.

PrairieSky holds Encana's wholly owned lands in Western Canada and its IPO raised C$1.46 billion ($1.35 billion). About 20 million shares changed hands on Thursday, making PrairieSky the most heavily traded stock on the Toronto exchange.

CIBC shares dropped 1.4 percent to C$97.68 after the bank’s second-quarter profit fell by nearly two-thirds, hurt by C$543 million in charges related to its Caribbean banking unit. Overall, financials, the index's most heavily weighted sector, fell 0.5 percent, with RBC losing 0.5 percent to C$74.76.

Investors also digested figures showing that the U.S. economy contracted in the first quarter for the first time in three years. But separate data indicated the number of Americans filing new claims for unemployment benefits fell more than expected last week.

After a strong start to the year, the Toronto stock market's benchmark index is down on the month. It has fallen in the last three sessions.

“I expect short-term volatility," said Diana Avigdor, portfolio manager and head of trading at Barometer Capital Management.

“Some energy shares are taking a bit of a breather,” she said, adding that investors with current positions in oil and gas shares may not want to add to them until they see some upward momentum.

Avigdor said she was seeing strong international interest in PrairieSky.

“We like the natural gas market,” she said. “The 4 percent yield and the royalty production growth of 3-5 percent are probably two of the most important metrics to this deal." Barometer owns shares of PrairieSky.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 22.01 points, or 0.15 percent, at 14,588.95. Six of the 10 main sectors on the index were higher.

Shares of energy companies edged higher, helped by stronger oil prices. Canadian Natural Resources Ltd (CNQ.TO) added 0.8 percent to C$44.28. Encana rose 1.2 percent to C$25.25.

Editing by Nick Zieminski; and Peter Galloway

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