CANADA STOCKS-TSX flat as energy gains offset Europe worries

Wed Jul 18, 2012 4:59pm EDT
 
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* TSX ends up 7.96 pts, or 0.1 pct, at 11,579.15
    * Energy shares rise on higher U.S. oil
    * Financials gain on solid BofA earnings
    * Merkel comments ignite euro zone concerns

    By Jon Cook
    TORONTO, July 18 (Reuters) - Canada's main stock index eked
out its fourth straight gain on Wednesday, led by energy shares,
but risk sentiment was rattled after comments by German
Chancellor Angela Merkel reignited worries about the euro zone
debt crisis.
    Half of Canada's 10 main sectors finished higher, reflecting
investor uncertainty about the outlook for global growth.
    "Canada is flat," said Pat McHugh, Canadian equity
strategist at Manulife Asset Management. "We're not going to get
anything moving here until we see a whiff of global growth."
    The heavyweight oil and gas patch kept the broader index in
positive territory, rising 0.3 percent. Energy shares climbed
with oil prices amid rising tensions in the Middle East and as
U.S. gasoline stocks unexpectedly fell last week. 
    The most influential gainers included: Canadian Natural
Resources, up 2.8 percent at C$28.07, Suncor Energy
, which rose 0.7 percent to C$30.20, and TransCanada Corp
, up 1 percent at C$44.21.    
    The influential Canadian financial sector edged up 0.2
percent, as U.S. bank earnings continued to beat expectations.
    The latest winner was Bank of America Corp. On
Wednesday, America's second-largest bank posted second-quarter
earnings of $2.5 billion, reversing a year-earlier loss.
 
    That followed recent positive results from JPMorgan Chase &
Co, Wells Fargo & Co, Citigroup Inc and
Goldman Sachs Group Inc.
    "At the end of the day the numbers have been better than
expectations and that has improved the sentiment toward the
financials," said Bob Gorman, chief portfolio strategist at TD
Waterhouse.
    In Canada, financial gains were led by Toronto-Dominion Bank
, up 0.6 percent to C$80.37, Bank of Nova Scotia
, which rose 0.5 percent to C$52.29, and Bank of
Montreal, edging up 0.3 percent to C$57.78.
    North American earnings outlook was also helped by
second-quarter profits from U.S. bellwethers Intel and
Honeywell, defying the downward trend of U.S. economic
growth. 
    The Toronto Stock Exchange's S&P/TSX composite index
 finished up 7.96 points, or 0.1 percent, at 11,579.15.
At one point the index touched 11,615.38, its highest level
since July 10.
    Gains were limited by losses from the heavily weighted
materials sector, which slid 0.5 percent as gold fell on
dampened speculation that the cooling U.S. economy would
imminently require more stimulus. 
    Declines were led by top gold miners Goldcorp Inc,
which fell 3.6 percent to C$32.86, Barrick Gold, off
1.2 percent at C$34.66, and Yamana Gold, down 3.1
percent to C$14.50.
    Also weighing was Cogeco Cable Inc, whose shares
plunged nearly 15 percent to C$37.90 after the company said on
Wednesday it will pay $1.36 billion to buy U.S. cable operator
Atlantic Broadband. 
    Worries about Europe's debt crisis were also reignited
following comments by Merkel, who was quoted in a media report
as saying, "We have not yet shaped the European project so that
we can be sure that everything will turn out well, we still have
work to do."
    Markets were already in a nervous mood after U.S. Federal
Reserve Chairman Ben Bernanke said on Tuesday that the U.S.
economic recovery was being held back by anxiety over Europe's
debt crisis.
    However on Wednesday, before a House Financial Services
Committee, Bernanke moderated his tone, saying the world's top
economy would experience "continued moderate growth."
 
    Bernanke's remarks were backed up by fresh data that showed
U.S. housing starts rose 6.9 percent last month to a seasonally
adjusted annual rate of 760,000 units, the highest rate since
October 2008. 
    "There's something for the pessimists and there's something
for the optimists," said McHugh. "On the whole things are better
than expected."