March 4, 2008 / 3:20 PM / 11 years ago

UPDATE 1-Weak bank results knock Toronto stocks lower

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TORONTO, March 4 (Reuters) - Toronto’s main stock index was lower on Tuesday as disappointing results from two of the country’s biggest banks overshadowed another interest rate cut by the Bank of Canada.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 15.38 points, or 0.1 percent, at 13,529.00.

Eight of the TSX index’s 10 main groups were lower, led by a 0.9 percent decline in the heavily weighted financial group and a 0.5 percent drop in the rate-sensitive utilities group.

Bank of Montreal (BMO.TO) slipped 91 Canadian cents to C$47.45, while Bank of Nova Scotia (BNS.TO) fell 50 Canadian cents to C$46.00.

Bank of Montreal’s first-quarter earnings fell 27 percent as it took writedowns of C$362 million after tax for trading and valuation-related items in capital markets, and made a higher allowance for credit losses.

Bank of Nova Scotia said its first-quarter earnings dropped 18 percent amid substantial volatility in global financial markets.

“The market is trying to find a balance between the presumed stimulus that the rate cut might give, versus the bad news that seems to be coming out in the financial sector,” said Michael Sprung, president at Sprung and Co Investment Counsel.

Investors were also digesting the latest move from the Bank of Canada which slashed its overnight interest rate on Tuesday by half a percentage point for the first time since November 2001, lowering it to 3.50 percent and signaling further cuts to shield the economy from the damaging effects of the U.S. economic slowdown.

The blow from the disappointing bank results were offset by firm resource prices which saw oil and gold prices just below record highs.

Gold miner Agnico-Eagle Mines (AEM.TO) was up C$2.15 at C$72.80, while oil producer Nexen Inc NXY.TO added C$1.24 to C$32.11.

$1=$0.99 Canadian Reporting by Scott Anderson; Editing by Renato Andrade

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