May 7, 2009 / 8:54 PM / 10 years ago

CANADA STOCKS-TSX retreats from 2009 highs, financials drag

* TSX finishes down 1.74 percent at 9,967.05

* Rises early to 2009 high before easing

* Big insurers weigh on financial issues

* Energy group succumbs to oil price reversal (Updates to close, adds details, quote)

By Jennifer Kwan

TORONTO, May 7 (Reuters) - Toronto’s main stock index retreated on Thursday, after four sessions of gains, as weak results from Canada’s big insurers hit financial issues, while crude oil prices pulled back from earlier highs.

The financials group, down 3.2 percent, led the broad selloff as the country’s top three insurers reported quarterly results that reflected ailing stock markets, credit impairments and the need to shore up reserves. [ID:nN07467694]

Manulife Financial (MFC.TO) fell 2.5 percent to C$22.18, while Sun Life (SLF.TO) fell 6.5 percent to C$28.00. Great-West Life (GWO.TO) tumbled 6.3 percent to C$21.45.

Banks were also under pressure, with Royal Bank of Canada (RY.TO) off 2.5 percent at C$43.89, ahead of the results of “stress tests” of major U.S. banks due at 5 p.m.

The energy group was off 1.1 percent as the price of oil CLc1 fell back from early gains but still ended up 37 cents at $56.71 a barrel, its highest settlement in six months. [ID:nSP407747] The materials group slid 0.8 percent, even as gold prices remained steady.

The S&P/TSX composite index .GSPTSE ended down 176.38 points, or 1.74 percent, at 9,967.05. The blue chip S&P/TSX 60 index .TSE60 closed 11.06 points lower, or 1.79 percent, at 605.67.

The index rallied at the open, rising close to 2 percent and touching a 2009 high of 10,340.78. But those gains faded quickly and the TSX tipped to low of 9,922.03.

While the results from insurers pressured the market, there was no major “fundamental story” to the turnaround, said Francis Campeau, a broker at MF Global Canada in Montreal.

“I think we’re seeing lots of profit-taking,” he said.

Andrew Pyle, a wealth adviser at ScotiaMcLeod, described Thursday’s action as an “outside reversal day”, meaning the TSX hit a Thursday high above Wednesday’s, but also hit a low that was below Wednesday’s low.

“From a purely a technical standpoint, this is not a good development and usually signals a retreat that can last several sessions, if not longer,” Pyle said in a note.

Stocks on the upside included Goldcorp (G.TO), ahead 2.5 percent at C$36.34 on stronger earnings, and Brookfield Asset Management (BAMa.TO), which rose 4.5 percent to C$20.17.

Elsewhere, two of Canada’s biggest telecom companies warned on Thursday that the recession was battering their key wireless businesses as consumers kept a tight rein on spending and used their mobile phones less. [ID:nN07389138]

Shares of BCE Inc (BCE.TO) — Canada’s biggest telecom company — sank 4.5 percent to C$24.90. Telus Corp (T.TO) rose 1.9 percent to C$31.21.

$1=$1.17 Canadian Reporting by Jennifer Kwan; editing by Rob Wilson

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