CANADA STOCKS-Jump in golds propels TSX higher; RBC slips

Thu May 30, 2013 5:00pm EDT
 
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* TSX rises 13.94 points, or 0.11 pct, to 12,746.55
    * Five of 10 main sectors advance
    * RBC falls 1.8 pct after results
    * Gold shares soar after jump in bullion price

    By John Tilak
    TORONTO, May 30 (Reuters) - Canada's main stock index edged
higher on Thursday as a rise in gold mining stocks as bullion
prices climbed offset a decline in Royal Bank of Canada 
after the lender reported quarterly results.
    Investors were also encouraged as limp U.S. economic data
suggested the Federal Reserve's stimulus measures will likely
remain in place for now.
    A drop in government spending dragged more on the U.S.
economy than initially thought in the first three months of the
year, and jobless claims rose in the latest week.
 
    But shares of RBC dropped 1.8 percent and were the biggest
negative influence on the market by far. Although RBC's
second-quarter profit met expectations, there was uncertainty
about future growth. 
    The results from the country's biggest bank follow profit
misses at Bank of Montreal, Bank of Nova Scotia
 and Toronto Dominion Bank.
    "You're starting to see some weakness in domestic margins,"
said Norman Levine, managing director at Portfolio Management
Corporation, which owns shares of Scotiabank but none of the
other big banks. "Banks with operations outside of Canada should
do better."
    He is negative on the Canadian banks in general because two
major growth drivers of the country's economy, natural resources
and housing, have started to slow. 
    "Their profit margins will be squeezed and their ability to
increase their dividend - the way they have in the past - will
be muted as well," Levine added.
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 13.94 points, or 0.11 percent, at 12,746.55.
    The Canadian market is up 2.5 percent since the start of the
year, compared with a more than 15 percent rise in the S&P 500
.
    "We are decreasing our reliance on Canadian equities and
increasing our reliance on non-Canadian equities, both U.S. and
international," Levine said.
    "We see underperformance," he added. "We are positive toward
equities in general, but Canadian equities will lag."
    Five of the 10 main sectors on the index rose.
    The materials sector, which includes mining stocks, gained
3.3 percent. 
    Gold shares advanced 5 percent, soaring for a second
straight day, as the price of gold rose 1.4 percent to hit a
two-week high. Gold prices benefited from optimism that the
central bank stimulus will not be withdrawn. 
    Barrick Gold Corp added 6.7 percent to C$21.91, and
Goldcorp Inc was up 5.1 percent to C$30.16.
    "Gold seems to be happy around $1,400," said Robert
McWhirter, president and portfolio manager at Selective Asset
Management. "A lot of the gold stocks, from a technical analysis
perspective, seem to have bottomed." 
    However, he didn't see much upside for the group in the long
term and was cautious on the space.
    The gold sector has lost about 33 percent since the start of
the year.
     Financials, the index's most heavily weighted sector, were
down 0.4 percent.
    Canadian Imperial Bank of Commerce reported an 8
percent rise in quarterly profit, due largely to lower
provisions for bad loans and higher wholesale banking income.
The stock fell 1.5 percent to C$79.22. 
    Energy shares declined 0.1 percent after oil prices slipped.