CANADA STOCKS-TSX reverses losses on stimulus hopes
* TSX up 26.86 pts, or 0.2 pct, at 11,493.81 * Mining stocks boosted by stimulus hopes * Financial shares lead losses * Weak U.S., Europe data weigh on markets * Corporate earnings results disappoint By Jon Cook TORONTO, July 25 (Reuters) - Canada's main stock index reversed early losses on Wednesday afternoon, rising with mining shares, as investors were hopeful that deteriorating global economic conditions would spur stimulus moves by central banks in the United States and Europe. Weak data from the United States and Europe raised expectations the Federal Reserve and European Central Bank would announce more monetary easing measures when they hold meetings next week. ECB Governing Council member Ewald Nowotny said there were arguments for giving Europe's new permanent rescue fund a banking license, enabling it to borrow unlimited central bank money and so boosting its capacity to prevent the crisis from spreading. "The market has been moving to a certain degree on stimulus hopes," said Pat McHugh, Canadian equity strategist at Manulife Asset Management. "The risk-off trade is in full force now. People are looking at the lower (U.S.) bond yields, they're thinking QE (is coming) and it's time to do a little hedging." The news was welcomed by Canada's beaten-down materials sector, which climbed 1.7 percent as gold mining stocks rallied with bullion prices. Top gold producers led the way, with Goldcorp jumping 3.6 percent to C$34.87 and Barrick Gold up 2.2 percent at C$34.49. Around 1:35 p.m. EDT (1735 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 26.86 points, or 0.2 percent, at 11,493.81. The index rebounded after hitting a session low at 11,428.67. In the latest troubling sign that the American recovery was faltering, data on Wednesday showed U.S. single-family home sales in June fell by the most in more than a year and prices resumed their downward trend. In Europe, German business sentiment dropped in July for the third straight month to its lowest level in over two years, reinforcing the view that even the euro zone's biggest economy was being damaged by the debt crisis. The news comes on the heels of a decision by ratings agency Moody's Investors Service to lower Germany's outlook to negative from stable. "It looks like Germany will avoid a recession, but the question is for how long?" said McHugh. "The economic news just keeps getting worse." Most of Canada's 10 main stock sectors were lower. The powerhouse financial services led declines, dipping 0.3 percent. Leading losses was Royal Bank of Canada, down 0.7 percent to C$50.44, Bank of Nova Scotia, off 0.9 percent at C$50.68, and Toronto-Dominion Bank, which sagged 0.3 percent to C$78.19. WEAK EARNINGS Second-quarter earnings from Canada's largest copper miner, railroad and grocery store chain also failed to excite. Teck Resources Inc plunged 5.8 percent to C$27.71 after the diversified miner said lower coal and metal prices contributed to a steeper-than-expected drop in quarterly profit and that it sees no reprieve anytime soon. Shares of Loblaw Cos Ltd fell 2.1 percent to C$31.24 after the grocer reported lower quarterly profit on Wednesday, as sales growth lagged an increase in expenses. Even Canadian National Railway Co, which reported a 17 percent rise in second-quarter profit, saw its shares slide 0.7 percent to C$86.68. However, shares of Canadian Pacific Railway, CN's main competitor, jumped 3 percent to C$77.29 after reporting its second-quarter net income rose to C$631 million from C$538 million a year earlier. TransAlta Corp shares tumbled 3.3 percent to C$15.62 after the oil and gas firm said it estimates a loss in the second-quarter compared with a year earlier due to higher maintenance costs, losses in energy trading and lower electricity prices.
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