February 6, 2008 / 9:40 PM / 11 years ago

UPDATE 4-Toronto stocks dragged down as oils, techs fall

(Updates numbers, adds detail, quotes)

TORONTO, Feb 6 (Reuters) - Early gains on the Toronto Stock Exchange fizzled out on Wednesday, leaving the main index lower as weak energy and tech issues undercut the morning’s optimism over strong company earnings.

After rising more than 100 points shortly after the open, the index tumbled as worries over the prospect of a U.S. recession again took hold.

Sliding oil prices set the tone for the heavyweight energy sector, which fell 1.4 percent, as crude stumbled amid an unexpectedly big rise in U.S. petroleum stockpiles. In Toronto, Petro-Canada PCA.TO lost C$1.45, or 3.3 percent, to C$43.12.

The tech sector was down 3.4 percent, with BlackBerry-maker Research In Motion RIM.TO falling C$4.32, or 4.9 percent, to C$84.60.

“Certainly this fear of a recession in the United States is still front and center in investors’ minds,” said Elvis Picardo, investment strategist at Northern Securities Inc.

“Some of the earnings were fairly strong but I think investors at this point are still quite concerned about what lies ahead,” said Picardo. “Perhaps the feeling is that the earnings outlook for many companies is not going to be as robust as was the expectation even three months ago.”

The S&P/TSX composite index .GSPTSE closed down 64.75 points, or 0.5 percent, at 12,867.20 with half of its 10 main groups in negative territory.

The financial sector also added to losses, falling 0.4 percent, with Canadian Imperial Bank of Commerce (CM.TO) down C$1.67, or 2.4 percent, at C$68.33, and Bank of Montreal (BMO.TO) off 55 Canadian cents, or 1 percent, to C$56.15.

On the upside, BCE Inc (BCE.TO) rose after the company, which is in line to be taken private in a C$34.8 billion buyout, reported its fourth-quarter profit was boosted by gains at its wireless business.

Shares of BCE, Canada’s largest telecoms company, rose 35 Canadian cents, or 1 percent, to C$34.90. The company’s stock has been battered recently by fears that the buyout could be delayed, repriced or simply called off, but its strong earnings helped ease those concerns.

The materials sector which had helped lift the Toronto benchmark in the morning, edged down 0.03 percent, stung by profit-taking. But the subindex of gold producers gained 1.3 percent as the price of bullion rallied.

Goldcorp (G.TO) was up 65 Canadian cents, or 1.9 percent, at C$35.53. Iamgold Corp (IMG.TO) added 13 Canadian cents, or 1.7 percent, to C$7.71 after it said it will spend $18.4 million to expand the mill at its Rosebel mine, thereby upping life-of-mine production.

$1=$1.01 Canadian Reporting by Leah Schnurr; Editing by Peter Galloway

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