December 6, 2012 / 2:04 PM / 5 years ago

Loblaw surges but TSX drops slightly as TD slips

TORONTO (Reuters) - Canada’s main equity index slipped on Thursday as investor concern about flat quarterly results from Toronto-Dominion Bank (TD.TO) and about its latest U.S. acquisition offset a 14-percent jump in Loblaw Cos Ltd (L.TO) on the grocer’s plan to spin off its real estate assets.

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

The market was also hurt by bleak comments from the European Central Bank about the outlook for the region, as well as by continuing distress over the still-unresolved U.S. fiscal crisis.

Shares of Toronto-Dominion, the country’s second-biggest bank, ended 1.8 percent lower at C$81.12 after it said it is buying the owner of Epoch Investment Partners for $668 million in cash to expand its U.S. asset management business. It also reported a flat quarterly profit that spurred market concern over the bank’s higher expenses and loan loss provisions.

TD was the index’s biggest heavyweight decliner.

“TD has been a laggard of all the banks this year. People were expecting more. There is nothing to write home about the results,” said Irwin Michael, portfolio manager at ABC Funds.

Shares in Canadian Imperial Bank of Commerce (CM.TO) and National Bank of Canada (NA.TO) also slipped after they reported quarterly earnings on Thursday.

The financial sector, the index’s biggest, dropped 0.6 percent, while the energy sector slipped 0.2 percent, hurt by falling oil prices. Brent January crude fell $1.78 a barrel to $107.03. <O/R>

Suncor Energy Inc (SU.TO) lost 0.6 percent to C$32.48, Cenovus Energy Inc (CVE.TO) fell 0.7 percent to C$33.21, and Encana Corp ECA.TO was down 1.3 percent at C$21.25.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended down 6.16 points, or 0.05 percent, at 12,151.13. Four of its 10 main sectors closed lower.

The weakness was tempered by Loblaw, the country’s largest grocer, which said it would create one of Canada’s biggest real estate investment trusts to hold a big chunk of its properties and would sell units in it through an initial public offering.

The stock rose 13.7 percent to C$38.20, having hit a 52-week high of C$42.05 earlier in the session. Loblaw parent George Weston Ltd (WN.TO) gained 6.7 percent to C$67.71. The consumer staples sector advanced 1.2 percent.

“The market is probably right here about being enthusiastic,” said John Ing, president of Maison Placements Canada.

“It is a smart deal for them. This is a good way of utilizing an underutilized asset,” he said of Loblaw’s plan to unlock the value of the prime real estate it owns across the country.

Shares of Canadian Tire Corp (CTCa.TO), another owner of prime retail real estate, were up 2.3 percent at C$67.31, while coffee chain Tim Hortons Inc THI.TO rose 2.5 percent to C$46.52.

Lululemon Athletica Inc LLL.TO gained 7.1 percent to C$72.89 after the yogawear retailer’s earnings beat expectations and it laid out a more detailed plan to expand internationally.

The European Central Bank held interest rates steady on Thursday but President Mario Draghi revealed that officials had pondered a cut and predicted the euro zone economy would shrink again in 2013. <MKTS/GLOB>

“The fact that they are considering an interest rate cut tells us the economy appears to be in recession. They’re going to have to keep on pumping the system with more supply of funds until confidence is restored,” ABC’s Michael said.

($1=$0.99 Canadian)

Additional reporting by Cameron French and Alastair Sharp; Editing by Jeffrey Hodgson; James Dalgleish and Peter Galloway

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