TSX rises with financials as gold miners slump

TORONTO (Reuters) - Canada’s main stock index rose on Thursday, helped by broad gains for financial stocks a day after the Federal Reserve hiked interest rates and struck a hawkish note on further increases, a move which weighed on Canadian gold miners.

A TMX Group sign, the company that runs the Toronto Stock Exchange (TSX), is seen in Toronto, June 23, 2014. REUTERS/Mark Blinch/File Photo

The Toronto Stock Exchange’s S&P/TSX composite index closed up 21.13 points, or 0.14 percent, at 15,218.31, while U.S. stocks continued to hover near record levels as investors viewed the Fed’s interest rate outlook as a sign of confidence in the economy.

“As long as the consumer remains healthy and we’re having wage inflation, the U.S. economy should remain quite strong,” said Ben Jang, portfolio manager at Nicola Wealth Management.

“Generally the equity markets can easily absorb rates rising to a certain point.”

The financials group gained 0.8 percent as bond yields extended their climb since the U.S. election. Higher yields reduce the value of insurance companies’ liabilities and increase net interest margins of banks.

Royal Bank of Canada rose 0.9 percent to C$91.49 and Toronto-Dominion Bank added 1.1 percent to C$66.51.

A strategy to tap debt markets outside of Canada enabled Manulife to complete its biggest round of financing for seven years during 2016, its chief financial officer said.

Shares of the country’s largest life insurer gained 2.6 percent to C$25.01.

Energy stocks added 0.5 percent as oil settled little changed after sliding to its lowest level in a week in volatile trade, while Bombardier jumped 2.1 percent to C$1.95 after saying growth in its rail business and the ramp-up of the C Series aircraft program should help boost full-year consolidated revenue in 2017 by a low single-digit percentage. [O/R]

Six of the index’s 10 main groups gained ground. The index had its sharpest fall in a month in the prior session.

The materials group, which includes precious and base metals miners and fertilizer companies, dropped 2.2 percent, with Barrick Gold Corp falling 4.4 percent to C$18.68 and Yamana Gold Inc down 5.9 percent at C$3.51.

Gold fell more than 1 percent to a 10-1/2-month low as higher bond yields lifted the opportunity cost of holding the non-yielding precious metal and the U.S. dollar surged to a 14-year high. [GOL/]

Supermarket owner Empire Co Ltd fell 17 percent to C$15.52 after reporting a sharp miss on quarterly profit as same-store sales fell.

Canadian manufacturing sales unexpectedly fell 0.8 percent in October from September on widespread weakness, indicating fourth-quarter growth could be sluggish.

Additional reporting by Alastair Sharp; Editing by Paul Simao and Phil Berlowitz