February 24, 2016 / 12:45 PM / a year ago

TSX pares losses on higher oil prices but bank earnings weigh

3 Min Read

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014.Mark Blinch

TORONTO (Reuters) - Canada's main stock index fell to a one-week low on Wednesday as weaker-than-expected bank earnings dragged down financial stocks, but higher crude oil prices helped pare some of the losses, providing support for energy stocks.

The biggest movers on the index were bank stocks after Royal Bank of Canada (RY.TO) posted quarterly earnings which fell short of analyst forecasts.

RBC, Canada's second-largest lender by assets, was hurt by weakness in its insurance and capital markets businesses, while it also showed increasing signs of pain from the oil price crash and economic slowdown in Western Canada.

Its stock fell 2.6 percent to C$67.81, and Toronto-Dominion Bank (TD.TO) declined 1.8 percent to C$51.23. The overall financials group fell 1.6 percent.

"We are starting to see where the loan losses on the oil patch fit in," said John Kinsey, a portfolio manager at Caldwell Securities.

He expects more impaired loans to become loan losses, providing a headwind for the stocks

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE fell 23.17 points, or 0.18 percent, at 12,740.27. It hit its lowest since Feb. 16 at 12,506.05.

Five of the index's 10 main groups ended lower.

The energy group rose 1.3 percent as crude oil prices reversed course after strong demand for gasoline offset worries about record high crude inventories. [O/R]

U.S. crude CLc1 prices settled at $32.15 a barrel, up 0.88 percent.

The shares of energy producer Encana Corp (ECA.TO) (ECA.N) surged 22.7 percent to C$5.09 after the company cut its 2016 capital spending forecast to less than half its 2015 expenditure and said it would lay off 20 percent of its workforce this year.

The materials group, which includes precious and base metals miners and fertilizer companies, rose slightly, up 0.1 percent.

Fertilizer company Potash Corporation of Saskatchewan Inc (POT.TO) rose 3.1 percent to C$22.66. But Teck Resources Ltd TCKb.TO fell 7.5 percent to C$7.67 and gold miners were mixed.

Reporting by Fergal Smith; Editing by W Simon and Diane Craft

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