CANADA STOCKS-TSX rallies on banks, falls 6.3 pct in May

Thu May 31, 2012 5:38pm EDT
 
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* TSX up 79.99 pts, or 0.7 pct, at 11,513.21
    * Index down 6.3 percent in May
    * Financial issues pull TSX higher
    * U.S. data, Spain stoke investor fears
    * CGI up 14 percent after Logica deal

    By Jon Cook	
    TORONTO, May 31 (Reuters) - Toronto's main stock index
rallied o n T hursday, led higher by financial issues on strong
second-quarter bank earnings and as oil and gold shares pared
earlier losses.	
    However, the index still recorded its largest monthly drop,
falling 6.3 percent since September as commodity markets were
rattled in May by an escalation in the euro zone debt crisis.	
    Nine of Canada's 10 main sectors finished higher, led by the
financial group, which jumped 1.5 percent on
better-than-expected second-quarter results from Canadian
Imperial Bank of Commerce and National Bank of Canada
. 	
    Shares of CIBC, Canada's No. 5 bank, jumped 2.5 percent to a
two-week high at C$72.07 after the company reported a 6 percent
increase in net profit due partly to higher loan volumes.
Smaller rival National Bank's shares edged up 0.7 percent to   
C$73.66 after it said core profit rose 6 percent and increased
its quarterly dividend by 5 percent.	
    Royal Bank of Canada shares led the sector's gains,
rising 1.8 percent to C$51.55.	
    "That's been one of the few bright spots on the TSX," said
Elvis Picardo, strategist and vice president of research at
Global Securities in Vancouver. "That's giving an element of
support to the TSX, because the other two major groups -
materials and energy - have literally fallen off a cliff."	
    For the month the materials index, which includes
miners, shed 7.3 percent, while the oil and gas sector 
plunged 11.9 percent.	
    On Thursday, both groups were flat, with materials down 0.1
percent and energy up by the same amount.	
    Cenovus Energy, which rose 1.4 percent to C$32.55,
led oil gains, reversing early losses despite crude futures on
both sides of the Atlantic posting their biggest monthly decline
in years. 	
    Losses on the materials side were led by the sub-group of
base metals miners, which fell 0.4 percent. Teck Resources
 was among the most influential declines, falling 1.1
percent to C$30.94 as copper prices hit a 2012 low and plummeted
11 percent in May. 	
    "Just when you think they can't go any lower, they go
punishingly lower," said Barry Schwartz, vice president and
portfolio manager at Baskin Financial Services.	
    The Toronto Stock Exchange's S&P/TSX composite index
 finished up 79.99 points, or 0.7 percent, at
11,513.21.	
    The market has been preoccupied with the euro zone debt
crisis, but a slew of soft data o n T hursday raised doubts about
the strength of the U.S. recovery.	
    A report by private payrolls processor ADP showed private
U.S. employers created 133,000 jobs in May, fewer than the
expected 148,000, while new claims for unemployment benefits
rose by 10,000 for the fourth straight weekly increase. The data
comes ahead of Friday's government payrolls report.
  	
    Adding to the negative tone, the Institute for Supply
Management-Chicago business barometer declined to 52.7 from 56.2
in April, its lowest level since September 2009 and below Wall
Street expectations. 	
    Spain was in the center of the latest developments as
markets judged the Madrid government would sooner or later have
to ask for outside help to bail out its banks. On Thursday,
however, International Monetary Fund Director Christine Lagarde
denied a media report that the IMF was considering contingency
plans for a Spanish bailout. 	
    A new Greek poll that showed Greece's conservative
pro-bailout New Democracy party had a slim lead in the run-up to
the June 17 election helped ease concerns about whether the
country would remain in the euro zone. 	
    On another positive note, Canada's information and
technology sector jumped 4.3 percent on news that CGI Group Inc
 agreed to buy Anglo-Dutch IT services firm Logica
 for $2.64 billion. CGI's shares surged 14 percent to    
C$23.95. 	
    Canadian Pacific Railway shares climbed 1.3 percent
to C$76.08 after the Canadian government passed back-to-work
legislation on Thursday to end an 8-day strike at Canada's
second-largest railway operator.