TORONTO (Reuters) - Canada's main stock index closed flat on Friday, but not far from its record high, as bank, insurer and railroad shares benefited from the likelihood of stronger economic growth in North America.
Rising government debt yields also helped the financial stocks.
With Wall Street closed for the U.S. Independence Day holiday, Canadian investors showed little interest in making any dramatic moves following some blockbuster economic data and central bank news this week that had pushed the Toronto Stock Exchange' benchmark index to record highs. The index was last at these levels in 2008, before the global financial crisis.
Thursday's U.S. jobs numbers for June smashed forecasts and effectively dispelled fears about the health of the economy after a weather-hit start to the year.
Also, U.S. Federal Reserve Chair Janet Yellen took comfort in indications of economic recovery while steering clear of rate-hike talk. "All the signs that are emanating out of the Fed in the States are that things are starting to get better," said Rick Hutcheon, president at RKH Investments. "Yellen has certainly given every indication that she's in no immediate hurry to raise interest rates." That mix of still-low borrowing costs and continued ascent in government debt yields should bode well for Canada's financial shares, Hutcheon said. Over the longer term, life insurance companies may become more attractive than banks as interest rate rises eventually take hold, he said.
Insurer Manulife Financial Corp gave one of the single biggest boosts to the index on Friday, adding 1.2 percent to C$21.82. Toronto-Dominion Bank gained 0.3 percent to C$55.28 and Bank of Nova Scotia was up 0.2 percent at C$71.80.
Canadian Pacific Railway Ltd jumped 1.5 percent to C$198.95, while rival Canadian National Railway gained 0.6 percent to C$70.02. Both stocks have gained in value as oil is increasingly sent across the continent by rail.
"The railroads are pretty much a coincident indicator. That is to say, if you get rising GDP growth, then that very quickly gets reflected in freight volumes," said Bob Gorman, chief portfolio strategist at TD Waterhouse.
The Toronto Stock Exchange's S&P/TSX composite index closed up 7.85 points, or 0.05 percent, at 15,214.96.
That was just short of the index's record high, 15,256.36, hit on Thursday.
"It's been a long time since we set that record, so we're really just playing catch-up here," TD's Gorman said.
Editing by Chris Reese; and Peter Galloway