May 17, 2012 / 12:57 PM / in 5 years

TSX shrugs off U.S., Europe worries

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch

TORONTO (Reuters) - Canadian stocks ended a four-session slide on Thursday, eking out a slender gain, as a strong performance from gold miners offset financial losses on soft U.S. economic data and mounting worries about Greece and Europe’s fragile banking sector.

Canada’s sub-index of gold mining firms jumped nearly 6 percent as gold notched its largest one-day gain since late January. <GOL/>

The move in gold helped the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE outperform U.S. stocks, which hit a four-month low on Thursday. .N

“We’ve performed better than the U.S. markets today, which has not been the case for much of 2012 to this point,” said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, Missouri.

Canada’s top gold producers, Barrick Gold (ABX.TO) and Goldcorp (G.TO), led the day’s gains, both rising 6.9 percent to finish at C$38.16 and C$35.48, respectively. Smaller miners also jumped, with Eldorado Gold (ELD.TO) rising 5.8 percent to C$11.01 and Yamana Gold (YRI.TO) climbing 4.5 percent to C$13.79.

Gold was also boosted by Wednesday’s release of the U.S. Federal Reserve’s minutes from its most recent meeting in which policymakers kept alive the possibility of a fresh round of monetary stimulus for the moderately expanding U.S. economy.

“Gold for a very long time now has been reflecting the extremely easy monetary policies of the Fed and other central banks around the world,” said Fehr.

Weak U.S. data on Thursday supported the case for further monetary easing. A gauge of future U.S. economic activity fell in April for the first time in seven months, and the Philadelphia Federal Reserve Bank’s business conditions index fell to its lowest level since September. U.S. jobless claims also underwhelmed.

The TSX finished virtually flat, up a mere 4.6 points, or 0.04 percent, at 11,330.68. It touched a session high at 11,421.83, a day after hitting a seven-month low at 11,298.46.

Thursday’s gains were muted by jitters over political turmoil in Athens. Sentiment had indicated that politicians who reject harsh austerity measures were likely to win the June 17 elections, but a poll on Thursday showed the conservative New Democracy Party in the lead. Wednesday’s move by the European Central Bank to stop providing liquidity to some Greek banks contributed to the pressure.

“What’s dominating the markets is fear of an uncontrolled Greek exit from the euro,” said Fergal Smith, managing market strategist at Action Economics.

Worries about Spanish banks also resurfaced after a media report said customers of Bankia (BKIA.MC), the partly nationalized lender, had withdrawn more than 1 billion euros ($1.27 billion) from their accounts in the past week. The Spanish government said there had been no such exit of deposits.

Canadian financial issues fell 1.6 percent. Toronto-Dominion Bank (TD.TO) slid 1.6 percent to C$77.65 and Royal Bank of Canada (RY.TO) shed 2 percent to C$51.96.

Royal Bank of Canada, Canada’s largest bank, is among a group of suitors that have made initial bids to buy the non-U.S. wealth management business of Bank of America (BAC.N) in a deal that could be worth about $2 billion, sources said.

Smith saw Thursday’s boost being short-lived and expected the TSX would eventually test last year’s low of 10,848.19, reached on October 4, before staging a larger rally.

“The market will see increased support as that trough comes into view.”

In other news, shares of Canadian Pacific Railway Ltd (CP.TO) rose 0.9 percent to C$76.51 after Chief Executive Fred Green resigned following a bitter proxy battle with New York activist shareholder William Ackman on Thursday, clearing the way for a management overhaul at the country’s second-biggest railroad.

Sears Canada SCC.TO shares plummeted nearly 13 percent to C$11.45 after parent company Sears Holdings Corp (SHLD.O) said on Thursday it will spin off a large part of its stake in its Canadian unit.

Pan American Silver Corp PAA.TO surged 8.6 percent to C$16.38 as the price of silver rose more than 4 percent on Thursday after having fallen for eight straight days.

Shares of Research In Motion Ltd RIM.TO were up nearly 4 percent at C$11.61 after the struggling smartphone maker said the UK agency responsible for setting standards for computer security has approved the BlackBerry 7 operating system for government use.

($1=$1 Canadian)

Editing by Kenneth Barry

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