CANADA STOCKS-TSX falls 1 pct on U.S. debt, earnings
* 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 uninspired Canadian earnings and a impasse 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 ongoing debate over raising the U.S. debt ceiling and avoiding default.
Wall Street banks were preparing for the real possibility the United States could lose its top credit rating, which they say would cost the country $100 billion in additional interest payments and hurt both consumers and the economy. [ID:nN1E76P002]
Economically sensitive financial issues, which make up about a third of Toronto's main index, were down 1.34 percent amid the U.S. uncertainty. Three of the top five decliners on the index were banks.
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$52.06.
While many believe a solution to the U.S. debt crisis will be found, questions remain over when and 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.
"I think everyone's sitting on their hands ... We just have to sit here and wait it out."
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 its 10 main index groups fell.
The index, which has struggled to hang on to gains over the past two months, is now below where it was at the beginning of the year.
Key resource sectors also kept the TSX under pressure on Tuesday. The materials group fell 0.59 percent, while energy stocks were off 0.94 percent amid choppy trade in the crude market.[O/R]
Canadian Natural Resources (CNQ.TO: Quote) was among the most influential decliners, giving back 1.86 percent to C$40.62.
"I think the people invested in the commodities-oriented stocks are probably a little bit more nervous. I suspect that when the Americans do what they need to do, the results will be a rally for the U.S. dollar, and that of course will be, in the short term, bad news for energy prices, bad news for gold and hard asset prices," said Hutcheon.
"You're seeing a lot of people being very gunshy about being in the heart of commodity assets right now."
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]
Canadian Oil Sands COS.TO closed down 2.44 percent at C$27.57. The company, which has the largest stake in the Syncrude Canada oil sands project, reported a 42 percent rise in profit after markets closed, slightly below analyst forecasts. [ID:nN1E76O116]
Rogers Communications (RCIb.TO: Quote) slid 3.49 percent to C$36.50 after it reported an almost flat quarterly profit, pressured by competition, particularly in the wireless sector.
($1=$0.94 Canadian) (Editing by Peter Galloway and Rob Wilson)
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