June 22, 2012 / 1:03 PM / 5 years ago

Banks lead TSX higher; weaker golds, Centerra drag

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

TORONTO (Reuters) - Canada’s main stock index edged higher on Friday, helped by a recovery in financial and energy issues following a sharp drop on Thursday, but gains were held back by a decline in gold miners, including a huge fall in Centerra Gold Inc (CG.TO).

Financial stocks rose 0.7 percent as Canadian banks tracked their U.S. peers, which also recovered from declines on Thursday, when news of imminent bank downgrades from Moody’s sparked a selloff. <.

“Canadian banks are reflecting some of that improved sentiment,” said Elvis Picardo, strategist at Global Securities in Vancouver. “The thinking is that the worst is over for the U.S. banks, and the rating agency is a little behind the curve.”

The one Canadian bank that was downgraded on Thursday, Royal Bank of Canada (RY.TO), played the biggest role in pushing the Canadian index higher, rising 1.2 percent to C$51.96.

Suncor Energy (SU.TO) also lifted the market, rising 2.0 percent to C$28.26.

Energy shares gained with U.S. crude futures, which rose on a potential storm that could threaten production in the Gulf of Mexico. <O/R>

The Toronto Stock Exchange closed up 27.22 points, or 0.24 percent, at 11,435.54. It closed down 0.8 percent for the week in large part because of Thursday, when it suffered its worst decline of 2012. The index dropped 3 percent on June 21 as a raft of data raised fears about global growth.

“Yesterday was a bit of an over reaction - we’re getting some reflex back from that today,” said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, Missouri.

GOLD SHARES WEAKER

Every major group in the index rose except materials, which includes gold and base metal miners. It fell 0.9 percent. Gold, which gained modestly Friday, posted a weekly drop of nearly 4 percent. <GOL/>

Centerra’s stock plunged 26.1 percent to C$8.71 on news a parliamentary commission in Kyrgyzstan had alleged that its Kumtor mine was damaging the environment. The company said the allegations were without merit.

Centerra was the second biggest drag of any TSX company on the index. Barrick Gold (ABX.TO), the world’s top gold producer, had the biggest impact, falling 1.7 percent to C$38.84. <GOL/>

“Gold seems to have lost a lot of its safe haven appeal, some of that luster,” said Picardo. “You’ve seen the gold group unusually volatile in recent weeks, and there’s been no let up in volatility this week.”

Helping support the market, Valeant Pharmaceuticals International Inc (VRX.TO) rose 2.8 percent to C$47.84, recovering from a sharp selloff on Thursday that followed news it expected results from the second quarter to be weaker than those reported for its first.

Outside of the main index, Theratechnologies Inc’s (TH.TO) shares dropped more than 60 percent after the Canadian drugmaker said its European partner Ferrer Internacional SA was withdrawing the marketing application for its drug for HIV patients.

Editing by Jeffrey Hodgson

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