TORONTO (Reuters) - Canada’s main stock index fell on Tuesday as a decline in oil and gas shares and a drop in Bank of Montreal (BMO.TO) offset optimism spurred by comments by U.S. Federal Reserve Chair Janet Yellen on monetary policy direction.
BMO shares shed 2 percent to C$75.83 after the lender posted a smaller-than-expected first-quarter profit, hurt by the impact of declining long-term interest rates on its insurance unit and lower investment and corporate banking revenues.
Investors also processed comments by Bank of Canada Governor Stephen Poloz, who said last month’s surprise interest rate cut bought the central bank time to see how the economy responds to a plunge in oil prices.
Yellen began testifying to U.S. lawmakers about plans for an eventual interest rate increase, saying the Fed was preparing to consider rate hikes “on a meeting by meeting basis”.
“As expected, she left the door pretty open for all options in her testimony. She was neither dovish nor hawkish here,” said Macan Nia, a director of capital markets and strategy at Manulife Asset Management.
”They are likely to raise rates before June, and from June going forward, it will be very data dependent,” he added.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 35.29 points, or 0.23 percent, at 15,164.97. Six of the 10 main sectors on the index were in the red.
BMO’s decline pulled the financial sector lower. In the group, Bank of Nova Scotia (BNS.TO) lost 1.1 percent to C$65.22.
Shares of energy producers slipped with oil prices. Suncor Energy Inc (SU.TO) fell 0.9 percent to C$38.34, and Talisman Energy Inc TLM.TO was down 1.2 percent at C$9.70.
Editing by Meredith Mazzilli and Peter Galloway