TORONTO (Reuters) - Canada’s main stock index closed flat on Wednesday as a drop in resource stocks on fears about the global economic outlook offset another day of gains by country’s biggest banks following strong earnings on Tuesday.
Banks and insurers accounted for six of the top ten gainers on the index. Investors digested news of higher profits and dividend increases from two banks on Tuesday and bet on more pleasant surprises as the rest of the cohort report.
Bank of Nova Scotia (BNS.TO) shares ended 1.3 percent higher at C$53.60, the single biggest positive influence on the index. After the bell, the lender announced it would acquire ING Groep’s ING.AS Canadian online bank for C$3.1 billion.
Analysts said recent acquisition activity in the Canadian market also lent support.
“The economy is growing slowly like many other developed markets, but if you’re a believer in the long-term story, the Canadian market is quite attractive,” said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, Missouri.
Progress Energy Resources Corp (PRQ.TO) shareholders approved an almost C$6 billion bid from Malaysia’s state oil company Petronas. The shares had already jumped to near that price tag after Petronas made the offer.
Ottawa said it is formally reviewing another Asian takeover deal for a Canadian resource company, the $15.1 billion bid for oil firm Nexen Inc NXY.TO from Chinese state-owned oil company CNOOC Ltd (0883.HK). Nexen shares edged higher.
The country’s largest life insurer, Manulife Financial Corp (MFC.TO) gained 2.2 percent after it said it had acquired financial planning firm Wellington West Financial Services from National Bank of Canada (NA.TO), which itself rose 1.7 percent.
But resource-related stocks, which are much more susceptible to the shifting tides of the global economy and its corresponding appetite for materials, were broadly lower.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 0.11 of a point at 12,009.79.
Gold, oil and copper prices all dropped as investors waited for signs from Federal Reserve Chairman Ben Bernanke that the U.S. central bank would ease policy. He is due to speak at a meeting in Jackson Hole, Wyoming, on Friday.
Recent data has shown the U.S. economy growing gradually, clouding the prospect of strong language from Bernanke supporting more monetary easing at the meeting of global central bankers later this week.
Meanwhile, European leaders continue to wrangle over the best way to contain the region’s debt crisis.
“We have to see more than just verbal action out of Europe. Portfolio managers are coming back from vacation and they’re getting nervous,” said Pat McHugh, Canadian equity strategist at Manulife Asset Management.
Industrial Alliance Insurance and Financial Services Inc (IAG.TO) jumped 4.9 percent to C$26.67 after BMO Capital Markets raised it to the equivalent of a “buy” rating from a “hold”. The company this month sold its U.S. fixed annuities business in a move seen improving its capital levels.
Pipeline operator Enbridge Inc (ENB.TO) gained 1.5 percent to C$39.28, clawing back some recent losses after Hurricane Isaac proved less damaging to oil installations than initially feared.
Editing by Jeffrey Hodgson