TSX ends up with banks; Bombardier falls after tariff hit

(Reuters) - Canada’s main stock index closed higher on Wednesday despite a sharp drop in Bombardier Inc shares after the plane and train maker was hit by a steep U.S. tariff, as heavyweight financial stocks moved higher.

FILE PHOTO: The Toronto Stock Exchange sign is seen in Toronto, Ontario, Canada July 6, 2017. REUTERS/Chris Helgren

The Toronto Stock Exchange’s S&P/TSX composite index finished up 135.54 points, or 0.88 percent, at 15,609.66. The index was at its highest since May.

Bombardier closed down 7.5 percent at C$2.10 after opening at its lowest since December 2016 following the U.S. Commerce Department’s decision to slap preliminary anti-subsidy duties on its CSeries jets.

Britain and the Canadian province of Quebec, where Bombardier employs thousands, have threatened retaliation.

On the positive side, all of the index’s 10 main groups were higher.

The financials group, which accounts for more than a third of the index’s weight, gained 1.1 percent as bond yields broadly rose and Canadian National Railway Co advanced 2.2 percent to C$103.60.

“The Canadian stock market, which has been dreadful, awful, throw-up-worthy the whole year, is maybe starting to come to life,” said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services.

“There’s significant upside still to be had with the Canadian banks.”

The energy group climbed 0.9 percent, helped by a stronger price of oil and lower Canadian dollar.

The loonie retreated after a speech by Bank of Canada Governor Stephen Poloz, who said there is no predetermined path for Canadian interest rates, suggesting a third rate hike is not imminent.

The Canadian dollar weakened to a near four-week low at C$1.2453 to the U.S. dollar, or 80.30 U.S. cents, after the speech and markets trimmed the perceived chances of a hike next month to 36.4 percent.

Meanwhile, U.S. oil prices rallied, after crude stockpiles unexpectedly drew down with refiners coming back online following Hurricane Harvey last month. The West Texas Intermediate benchmark settled up 26 cents, or 0.5 percent, per barrel at $52.14. [O/R]

The industrials group rose 1.1 percent.

The materials group, which includes precious and base metals miners and fertilizer companies, added 0.2 percent.

Tahoe Resources fell 11.35 percent to C$6.25 after it said Guatemala’s Supreme Court declined to act on renewing its export credential.

Ski-Doo maker BRP Inc lost 7.8 percent to C$41.65 after announcing a bought deal secondary offering.

Reporting by Ethan Lou in Calgary, Alberta; Editing by James Dalgleish