CANADA STOCKS-TSX flat; energy rally offset by US bank worry

Tue Jun 9, 2009 10:56am EDT
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* TSX up 4.18 points at 10,53.30

* Energy sector up 0.8 percent

* Worry over U.S. bank stress tests nags (Adds details and comments)

By Frank Pingue

TORONTO, June 9 (Reuters) - Toronto's main stock index was straddling the break-even level on Tuesday morning as nagging concerns about U.S. bank stress tests weighed on sentiment and offset the boost higher oil prices gave energy shares.

The index unwound an early gain as investors digested a report from a U.S. bailout watchdog panel that suggested bank stress tests should be repeated if the U.S. unemployment rate rises beyond levels assumed by regulators. [ID:nSP195491]

This weighed primarily on the financial index, which was down 0.15. Shares of Royal Bank of Canada (RY.TO: Quote) were down 0.6 percent at C$45.83, while Toronto-Dominion Bank (TD.TO: Quote) shares were off 0.2 percent at C$58.75.

"There's more chatter about the stress tests south of the border so that's certainly weighing," said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc.

"So the Canadian banks are a little bit weaker probably just in sympathy with concerns that in fact the stress tests might not have been fully adequate in scaling this downturn."   Continued...