September 2, 2009 / 9:18 PM / 9 years ago

CANADA STOCKS-TSX makes small gain as gold price glitters

* TSX up 11.54 points, or 0.11 percent, at 10,701.32

* Gold miners rally on big rise in bullion price

* Financials fall after strong performance last week (Adds details, quote)

By Jennifer Kwan

TORONTO, Sept 2 (Reuters) - Toronto’s main stock index eked out a slight gain on Wednesday, supported by rallying gold-mining shares, as the bullion price shot to near three-month highs on safe-haven buying due to investor caution about the pace of economic recovery.

Topping the list of heavyweight gainers were Barrick Gold (ABX.TO), up 8.5 percent at C$41.93, and Goldcorp (G.TO), which climbed 9.8 percent to C$43.86. The index’s materials group, home to miners and fertilizer companies, gained 6.4 percent.

Gold futures rallied above $980 an ounce as investors sought refuge from recent losses in the equity market. [ID:nL2167301]

Another factor helping to boost the allure of gold was private-sector jobs data on Wednesday that showed U.S. companies cut more jobs than expected in August, pressuring already-fragile investor sentiment.

“People are seeing the job losses are fairly high still. That’s having an impact,” said Paul Harris, portfolio manager at Avenue Investment Management.

The S&P/TSX composite index .GSPTSE climbed 11.54 points, or 0.11 percent, to close at 10,701.32, with three of its 10 main sectors higher. The index fell the previous two days.

“Golds are the big feature. With the pullback of the markets, gold has been a beneficiary of the move,” said John Ing, president of Maison Placements Canada.

“Expectations are that a lower U.S. dollar, together with the prospect of even more spending by the (U.S.) government is awfully good for gold and the gold stocks.”

Weighing on the index was the financial sector, down 2 percent, which fell as investors took profits following last week’s surprisingly strong earnings results for Canadian banks. The sector rose nearly 6 percent last week, but it has handed back some of those gains in the past two sessions.

“They’ve run up a lot. There’s profit taking,” said Harris.

Leading decliners included Toronto-Dominion Bank (TD.TO), down 2.6 percent at C$64.30, and Bank of Nova Scotia (BNS.TO), which fell back 2.2 percent to C$42.97. Royal Bank of Canada (RY.TO) sank 1.4 percent to C$54.74, while Manulife Financial (MFC.TO) was down 2.7 percent at C$21.12.

Analysts say investors are also growing wary of a market rally that has driven the resource-laden index up some 40 percent from its 2009 low in early March.

“The market has had huge moves up since the beginning of March so I guess now the money flow is leaving other markets and going into gold,” said Sal Masionis, stockbroker at Brant Securities.

Among individual company news, the small health care group got a big boost from MDS Inc MDS.TO after the company said on Wednesday it had struck a deal to sell its Analytical Technologies division and will seek buyers for its Pharma division.

MDS said the changes will let it concentrate on nuclear imaging, a move that some saw as a precursor to the company being wound up. [ID:nN02528673]

MDS shares surged 30.2 percent to C$8.36.

The blue chip S&P/TSX 60 index .TSE60 closed 0.74 points higher, or 0.12 percent, at 642.95.

$1=$1.11 Canadian Reporting by Jennifer Kwan; Editing by Jeffrey Hodgson

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