TORONTO (Reuters) - Toronto stocks remained weak on Tuesday on falling financial shares, as persisting worries over the U.S. credit crunch and a bleak outlook from the Bank of Canada hammered the country’s biggest banks.
The Bank of Canada cut its overnight interest rate by a quarter percentage point to 4.25 percent, saying it expected global financial market difficulties linked to the U.S. subprime crisis to persist longer than anticipated.
“Our market is weaker simply because we’ve got a Bank of Canada view that the U.S. economy is going to suppress demand for our exports and the problems in the subprime are not going to go away quickly,” said Fred Ketchen, director of equity trading at ScotiaMcLeod.
Compounding problems earlier in the day were comments from a U.S. Treasury official in charge of debt management who said it would be a “long and slow” process to build confidence in financial markets.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 27.08 points, or 0.2 percent, at 13,630.09.
All of the country’s biggest banks fell. Canadian Imperial Bank of Commerce (CM.TO) dipped C$1.82 to C$85.89 and Royal Bank of Canada (RY.TO), the country’s biggest bank, was off 80 Canadian cents at C$52.69.
Overall, five of the TSX index’s 10 main groups retreated, with the financial group off 1.1 percent and utilities down 0.9 percent.
But gains among the healthcare sector, which was up 0.4 percent, and the resource-heavy materials group, which rose 0.4 percent, cushioned some of the blow.
Gold shares gained ground as the price for the precious metal firmed around $795 an ounce. Agnico-Eagle Mines (AEM.TO), was up 35 Canadian cents at C$48.80.
Among other materials shares, Agrium Inc (AGU.TO) gained C$2.02 to C$62.95 and Potash Corp (POT.TO) rose C$2.48 to C$125.90. Agrium said on Monday it planned to buy UAP Holding Corp UAPH.O in a $2.65-billion deal that will make it North America’s largest agricultural retailer.
Biovail Corp BVF.TO, the country’s biggest publicly traded drugmaker, added 19 Canadian cents to C$14.77 after it said on Tuesday it reached an agreement with Watson Pharmaceuticals Inc WPI.N that will delay a generic version of Biovail’s Cardizem heart drug from hitting the market until April 2009.
Reporting by Scott Anderson; Editing by Bernadette Baum