CANADA STOCKS-Banks drive TSX to two-week high as data brightens mood

Tue Aug 13, 2013 5:06pm EDT
 
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* TSX rises 47.92 points, or 0.38 percent, to 12,642.19
    * Six of the 10 main index sectors advance
    * RBC has biggest positive influence on index

    By John Tilak
    TORONTO, Aug 13 (Reuters) - Canada's main stock index
touched a two-week high on Tuesday, lifted by positive economic
signals as well as comments by a U.S. Federal Reserve official
that data was too mixed for the Fed to detail an exit strategy
from its stimulus program.
    Figures showed U.S. retail sales rose in July at the fastest
pace in seven months, and that German analyst and investor
sentiment rose more than expected in August. 
 
    But U.S. economic performance is too mixed for Fed
policymakers to lay out a detailed path for reducing and
eventually halting their asset-purchasing program next month,
Atlanta Fed President Dennis Lockhart said on Tuesday.
 
    Financial stocks benefited from the economic optimism and
had the biggest positive influence on the index as investor
sentiment brightened. The group has climbed close to 10 percent
since hitting a low in April, and expectations have been
building for the bank earnings season later this month.
    "I do see some constructive activity on the banks," said
Keith G. Richards, portfolio manager and technical analyst at
ValueTrend Wealth Management. "They're starting to look a little
bit more bullish."
    "If you do see the banks dip in the next month or two, there
can be a buying opportunity," he added. 
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 47.92 points, or 0.38 percent, at 12,642.19,
after reaching 12,655.79, its highest level since July 30.
    Six of the 10 main sectors on the index were higher.
    Financials, the index's most heavily weighted sector,
advanced 1 percent. Royal Bank of Canada rose 1.1
percent to C$64.05, playing the biggest role of any single stock
in leading the market higher. Toronto-Dominion Bank 
climbed 1 percent to C$87.24.
    Near the end of August, Canadian banks are expected to
report a small rise in quarterly profits with lending volumes
restrained by economic uncertainty and a slowing housing market.
    "You'll see a big effort on costs by the banks," said Matt
Skipp, president of SW8 Asset Management. "It's still an
extremely tough net interest margin environment."
    Skipp said he finds the banks more expensive than their
peers in Europe and the United States and said he wouldn't be
surprised if bank stocks pulled back after the quarterly
reports.
    The index's materials sector, which includes mining stocks,
slipped 0.7 percent. Goldcorp Inc fell 1.1 percent to
C$29.30, and Barrick Gold Corp lost 1.8 percent to
C$18.40.