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

Tue Jul 26, 2011 6:01pm 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 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.
  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 was off 1.85 percent at
C$78.68, while Bank of Nova Scotia BNS.TO stumbled 2.10
percent to C$55.91, and Royal Bank of Canada RY.TO 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
 Canadian Natural Resources CNQ.TO 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 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 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)