May 6, 2008 / 2:28 PM / 11 years ago

UPDATE 1-Toronto stocks boosted by oil, but banks retreat

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TORONTO, May 6 (Reuters) - Toronto stocks were firm on Tuesday, buoyed by energy shares which got a boost from record oil prices, but further problems in the U.S. housing and credit markets hurt Canada’s heavily weighted financial shares.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was up 56.78 points, or 0.4 percent, at 14,331.12.

Seven of the TSX index’s 10 main groups fell. The decliners were led by a 1.6 percent drop among financial shares and a 0.3 percent fall in industrial shares.

But a 1.9 percent rise in the influential energy group, making up a third of the key index’s weighting, and a 1.1 percent boost in the resource-heavy materials group, offset the retreat in other sectors.

“We have a bid in the commodities square so that is keeping our index ahead, even though the financials are sloppy,” said Paul Hand, managing director at RBC Capital Markets.

“These continuing news flows of the fallout from the credit issues in the U.S. continue to provide aftershocks that upset the financial sector.”

Financial shares, which also account for about 30 percent of the overall index, dropped as pessimistic news in the U.S. housing market compounded concerns about the slowing U.S. economy.

Fannie Mae FNM.N, the largest provider of U.S. home financing, reported its third straight quarterly loss and said it would lower its common stock dividend as it sees significant credit losses stretching into 2009.

D.R. Horton Inc (DHI.N), the largest U.S. home builder, posted a quarterly loss of $1.3 billion as it wrote down the value of its land holdings and inventory of unsold homes.

Among Canada’s financial issues, Sun Life Financial (SLF.TO) shed C$2.31 to C$46.89 and Canadian Imperial Bank of Commerce (CM.TO) slipped 81 Canadian cents to C$73.12.

Sun Life said its quarterly profit rose 7 percent despite global credit pressures and a strong local currency.

Meanwhile, oil and metals shares tried hard to offset the broader losses on the key index, as U.S. crude oil hovered near record levels and gold rebounded from four-month lows.

Barrick Gold (ABX.TO) added 69 Canadian cents to C$40.10 and Potash Corp POT.TO rose C$2.49 to C$198.85.

U.S. crude oil prices traded around $119.40 a barrel after touching a record high near $121 on fear that Nigerian output cuts and geopolitical tensions between Iran and the West would cut supply.

Suncor Energy (SU.TO) added C$2.49 to C$118.99 and Nexen Inc NXY.TO rose 74 Canadian cents to C$37.14. ($1=$1.02 Canadian) (Reporting by Scott Anderson; Editing by Bernadette Baum)

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