May 5, 2008 / 9:25 PM / 11 years ago

REFILE-UPDATE 3-Toronto stocks end flat as financials weigh

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By Leah Schnurr

TORONTO, May 5 (Reuters) - The Toronto Stock Exchange’s main index ended little changed on Monday, pressured by a selloff in banking issues that countered a lift from surging commodity prices.

The tumbling banking sector led the downside, caught up in fresh worries from south of the border after a brokerage said Bank of America (BAC.N) was likely to renegotiate, or possibly walk away from, its deal to buy beleaguered mortgage lender Countrywide Financial CFC.N.

The development resurrected worries over the health of the U.S. financial sector that had been partly calmed when Bank of America stepped in to buy Countrywide, said Sal Masionis, a stockbroker at Brant Securities.

“These guys made an offer, and now they’re renegotiating it, so ... obviously a deal is not a deal,” said Masionis.

On Bay Street, Canadian Imperial Bank of Commerce (CM.TO) was down C$2.37, or 3.1 percent, at C$73.93, while Royal Bank of Canada (RY.TO) fell C$1.38, or 2.8 percent, to C$48.70. Overall, the sector lost 2.2 percent.

The S&P/TSX composite index .GSPTSE closed down 5.94 points, or 0.04 percent, at 14,274.34.

The energy and materials sectors were the only groups to end higher, helping to prop up the broader index for much of the day as crude oil prices scaled fresh heights.

The oil and gas group rose 1.4 percent, with Suncor Energy (SU.TO) up C$2.85, or 2.5 percent, at C$116.50, and Petro-Canada PCA.TO gaining C$1.06, or 2.1 percent, to C$52.47.

The price of crude, a key underlying commodity for the resource-heavy TSX, jumped $3.65 to $119.97 a barrel after earlier breaching the $120 mark, lifted by a weak U.S. dollar and worries over supply.

Also in resources, Potash Corp of Saskatchewan POT.TO added C$5.55, or 2.9 percent, to C$196.36, while Barrick Gold (ABX.TO) advanced C$1.10, or 2.9 percent, to C$39.41.

The materials sector pushed up 2.4 percent, and its smaller gold producers subindex added 1.9 percent, helped by rising bullion prices.

Goldcorp (G.TO) pushed up 35 Canadian cents, or 1 percent, to C$37.16 after it reported a jump in first-quarter profit, boosted by strong gold prices and the sale of its Silver Wheaton SLW.TO stake.

Analysts said the Toronto benchmark was also hurt by profit-taking on the heels of a strong three-day runup that saw it add on more than 3 percent.

“The stock market in general has had a nice bounce, both in Canada and the States, and specifically the financial sector had a bit of a recovery,” said Levente Mady, a broker at MF Global Canada in Vancouver.

“I personally think that’s just been a bit of a bounce that you want to sell into as opposed to a major turnaround.”

Also on the downside, the consumer discretionary sector gave up 1.8 percent, while the utilities group was off 1.3 percent.

Market volume was 424 million shares worth C$6.9 billion. Advancers outpaced decliners 861 to 700. The blue chip S&P/TSX 60 index .TSE60 edged down 0.93 of a point, or 0.11 percent, to 846.41.

In New York, stocks fell amid concerns over the buyout of Countrywide, as well as worries over the impact of soaring oil prices. The Dow Jones industrial average .DJI was down 88.66 points, or 0.68 percent, at 12,969.54, and the Nasdaq composite index .IXIC slipped 12.87 points, or 0.52 percent, to 2,464.12. ($1=$1.01 Canadian) (Editing by Rob Wilson)

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