3 Min Read
*TSX down 31.75 points at 11,731.24
*Energy sector leads index lower
*Banks reverse early losses (Updates prices, adds details, quotes)
By Claire Sibonney
TORONTO, June 1 (Reuters) - Toronto's main stock index dropped in volatile trading on Tuesday morning after mixed manufacturing data from several countries caused uncertainty about the pace of the economic recovery.
The energy sector was down 1.2 percent with Suncor Energy Inc (SU.TO), the country's biggest oil producer, losing 0.3 percent to C$32.42, and EnCana Corp (ECA.TO), Canada's largest natural gas producer, shedding 1.5 percent to C$32.73.
Data showed U.S. manufacturing expanded for a tenth straight month in May, but sluggish data from China and Europe disappointed markets, pressuring oil prices. [ID:nN01231825] [O/R]
"There's always something to worry about and that's what the market is worried about today," said Barry Schwartz, vice-president and portfolio manager at Baskin Financial Services.
Financial and gold-mining stocks led advancing shares with Bank of Nova Scotia (BNS.TO) soaring 3.4 percent to C$49.87 after reporting stellar quarterly results and Barrick Gold Corp (ABX.TO) rallying 2.7 percent to C$45.34. [ID:nN28202192] [GOL/]
"On the Canada front, strong gold combined with strong financials due mostly to good earnings from Scotia are helping to pump the market," said Francis Campeau, a broker at MF Global Canada in Montreal.
"Best results out of any of the Canadian banks, blew the doors off even with a significant currency impact," he said.
"After the selloff in May, banks are now trading at quite a reasonable valuation ... the earnings look very good this year and we should expect good increases for 2011 and most likely dividend increases across the board," Campeau added.
At 11:22 a.m. (1522 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 31.75 points, or 0.27 percent, at 11,731.24. Earlier, the index briefly turned positive.
In a move much anticipated by the market, the Bank of Canada raised its key interest rate to 0.5 percent from 0.25 percent on Tuesday, making Canada the first Group of Seven country to raise rates since the start of the recession. But the bank said the European debt crisis made its next rate move highly unpredictable. [ID:nN01103957]
"It's a good sign that the Canadian economy is in good shape, being the first G7 country to hike," said Campeau. "Although it might be interpreted as a negative, because there is less stimulus, I think it should be perceived as a positive."
$1=$1.05 Canadian Reporting by Claire Sibonney; Editing by Peter Galloway