Stocks end flat as financials weigh

Mon May 5, 2008 5:30pm EDT
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By Leah Schnurr

TORONTO (Reuters) - The Toronto Stock Exchange's main index ended little changed on Monday, pressured by a selloff in banking issues that countered a lift from surging commodity prices.

The tumbling banking sector led the downside, caught up in fresh worries from south of the border after a brokerage said Bank of America (BAC.N: Quote) was likely to renegotiate, or possibly walk away from, its deal to buy beleaguered mortgage lender Countrywide Financial CFC.N.

The development resurrected worries over the health of the U.S. financial sector that had been partly calmed when Bank of America stepped in to buy Countrywide, said Sal Masionis, a stockbroker at Brant Securities.

"These guys made an offer, and now they're renegotiating it, so ... obviously a deal is not a deal," said Masionis.

On Bay Street, Canadian Imperial Bank of Commerce (CM.TO: Quote) was down C$2.37, or 3.1 percent, at C$73.93, while Royal Bank of Canada (RY.TO: Quote) fell C$1.38, or 2.8 percent, to C$48.70. Overall, the sector lost 2.2 percent.

The S&P/TSX composite index .GSPTSE closed down 5.94 points, or 0.04 percent, at 14,274.34.

The energy and materials sectors were the only groups to end higher, helping to prop up the broader index for much of the day as crude oil prices scaled fresh heights.

The oil and gas group rose 1.4 percent, with Suncor Energy (SU.TO: Quote) up C$2.85, or 2.5 percent, at C$116.50, and Petro-Canada PCA.TO gaining C$1.06, or 2.1 percent, to C$52.47.   Continued...