March 3, 2011 / 9:40 PM / in 6 years

CANADA STOCKS-Healthy bank results take TSX to near 3-year high

   * TSX ends up 70.70 points, or 0.5 pct, at 14,214.72
 * Six of the 10 main groups higher
 * RBC up more than 5 pct, TD up almost 4 pct
 * Oil and gold shares slip as resource prices ease  (Updates to close, adds details, quotes)
 By Claire Sibonney
 TORONTO, March 3 (Reuters) - Toronto's main stock index pushed to its highest level in almost three years on Thursday, as investors cheered stellar quarterly results from Canada's two biggest banks, sending financial shares up sharply.
 Royal Bank of Canada (RY.TO) surged more than 5 percent to C$59.92 and Toronto-Dominion Bank (TD.TO) jumped almost 4 percent to C$83.60 -- both handily beating expectations as a strong economy supported loan growth and investment banking profit. [ID:nN03109694]
 TD also raised its quarterly dividend by 8.2 percent, becoming the first of the country's big five banks to do so since the financial crisis.
 "Very positive news out of the banks today... I think it puts a positive light on the earnings expectations for the banks yet to come, and we may see more broad-based dividend increases," said Philip Petursson managing director of portfolio advisory at Manulife Asset Management.
 John Kinsey, portfolio manager at Caldwell Securities, said TD Bank and Canadian Imperial Bank of Commerce (CM.TO), up 0.2 percent at C$82.59, are likely to consider a stock split if their shares keep heading toward the C$100 mark.
 "The main feature -- and the saving grace here -- is the financials," said Kinsey. "Commerce had set a very high bar, but it didn't seem to be a problem today."
 The financials group, which makes up a third of the TSX index, rallied more than 2 percent. RBC and TD were by far the most influential movers.
 The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended up 70.70 points, or 0.5 percent at 14,214.72. It was the best close since June 2008. Six of the TSX's 10 main groups finished higher.
 "It's hard to see the risks to the downside," said Petursson.
 "The economic data that we've seen this week and the near conclusion of the earnings season in the U.S. and Canada just indicate that earnings growth is sustainable. And, as we move towards the next earnings season, if expectations are where they are, we can definitely continue to see new highs."
 Energy and gold miners sold off, with the former group giving back 0.9 percent and the latter down 1.5 percent.
 The moves lower tracked a slip in commodity prices and market watchers said investors were likely taking profits following recent impressive runs in those sectors.
 U.S. crude oil futures fell after Venezuela pitched a plan to resolve Libya's crisis. Weaker oil prices also diminished the safe-haven appeal of gold, as did indications the European Central Bank may raise interest rates to battle inflation. [O/R] [GOL/] [ID:nLDE7220R1]
 Canadian Natural Resources (CNQ.TO), which swung to a fourth-quarter loss on Thursday, was the lead decliner, shedding 3.5 percent to C$47.97. Barrick Gold Corp lost 2.6 percent to C$51.10. [ID:nL3E7E30VP]
 "When it looked like civil war (in Libya), oil went sky high, as did gold, now they're doing a reversal here ... so the obvious ones are being affected by that," said Kinsey.
 ($1=$0.97 Canadian)  (Additional reporting by Solarina Ho; editing by Rob Wilson)                                        

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