UPDATE 2-Toronto stocks turn flat as materials drag
(Updates numbers, adds details, quotes)
TORONTO Feb 12 (Reuters) - The Toronto Stock Exchange's main index was flat late on Tuesday afternoon, after earlier gains sparked by a bond insurer rescue plan were undercut by retreating resource issues.
The S&P/TSX composite index .GSPTSE was up 4.32 points, or 0.03 percent, at 13,135.24 with three of its 10 main groups lower.
The benchmark had earlier climbed as high as 13,219.17 in a broad-based rally as banking shares rose after billionaire investor Warren Buffet said he has made an offer to three top bond insurers to reinsure $800 billion in municipal bonds.
Concern has swirled around troubled insurers that they could have their credit ratings downgraded, which could further weaken credit markets.
The Toronto financial sector was up 0.4 percent, with National Bank of Canada (NA.TO: Quote) rising 27 Canadian cents, or 0.5 percent, to C$52.71, and Bank of Nova Scotia (BNS.TO: Quote) adding 31 Canadian cents, or 0.6 percent, to C$48.63.
"If Warren is going to come to the rescue by taking the (municipal bonds) off the monoline insurers, then maybe that insurance he got with them is actually better quality than you thought it was," said Gavin Graham, chief investment officer at Guardian Group of Funds.
But Graham said that investors remained cautious of banking shares as "we saw a lot of landmines in the financial sector's balance sheet."
The materials sector, home to resource shares, led the downside, slipping 1.4 percent, while Fording Canadian Coal Trust FDG_u.TO slid after it reported a 57 percent drop in fourth-quarter profit. Continued...