CANADA STOCKS-TSX falls 1 pct on U.S. debt, earnings

Tue Jul 26, 2011 4:59pm EDT
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   * TSX falls 135.39 points, or 1.01 percent, to 13,300.56
 * Nine of the 10 main sectors retreat
 (Adds details, comments)
 By Solarina Ho
 TORONTO, July 26 (Reuters) - Toronto's main stock index
closed more than 1 percent lower on Tuesday as lackluster
Canadian earnings and a stalemate in U.S. debt talks kept many
investors on the sidelines.
 U.S. President Barack Obama's Democrats and the Republicans
were further apart than ever on Tuesday in the impasse over
raising the U.S. debt ceiling as Wall Street braced for a
looming U.S. debt default and credit downgrade.
 Wall Street banks are preparing for the real possibility
that the United States will lose its top credit rating, which
they say will cost the country $100 billion in additional
interest payments and hurt both consumers and the economy.
  Economically sensitive financial stocks, which make up
more than a third of the main Toronto index, were down 1.34
percent. Among them, Toronto-Dominion Bank (TD.TO: Quote) was off 1.85
percent at C$78.68, while Bank of Nova Scotia (BNS.TO: Quote) stumbled
2.10 percent to C$55.91, and Royal Bank of Canada (RY.TO: Quote)
dropped 1.44 percent to C$55.91.
 While many believe a solution to the U.S. debt crisis will
be found eventually, questions remain over what kind of deal
will be struck.
 "At the end of the day, everyone knows that a deal has to
be done and a deal will be done. The only question is, which
form the deal will take," said Rick Hutcheon, president and
chief operating officer at RKH Investments.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE finished the session down 135.39 points, or 1.01
percent, at 13,300.56. Nine of the 10 main index groups fell.
Canadian National Railway (CNR.TO: Quote) was the biggest drag on
the index, falling 4.24 percent to C$72.05 as concerns about a
slowdown in economic growth and profit-taking pulled the stock
lower. [ID:nN1E76P0RR]
 ($1=$0.94 Canadian)
 (Reporting by Solarina Ho; editing by Peter Galloway)