February 12, 2008 / 8:19 PM / 11 years ago

UPDATE 2-Toronto stocks turn flat as materials drag

(Updates numbers, adds details, quotes)

TORONTO, Feb 12 (Reuters) - The Toronto Stock Exchange’s main index was flat late on Tuesday afternoon, after earlier gains sparked by a bond insurer rescue plan were undercut by retreating resource issues.

The S&P/TSX composite index .GSPTSE was up 4.32 points, or 0.03 percent, at 13,135.24 with three of its 10 main groups lower.

The benchmark had earlier climbed as high as 13,219.17 in a broad-based rally as banking shares rose after billionaire investor Warren Buffet said he has made an offer to three top bond insurers to reinsure $800 billion in municipal bonds.

Concern has swirled around troubled insurers that they could have their credit ratings downgraded, which could further weaken credit markets.

The Toronto financial sector was up 0.4 percent, with National Bank of Canada (NA.TO) rising 27 Canadian cents, or 0.5 percent, to C$52.71, and Bank of Nova Scotia (BNS.TO) adding 31 Canadian cents, or 0.6 percent, to C$48.63.

“If Warren is going to come to the rescue by taking the (municipal bonds) off the monoline insurers, then maybe that insurance he got with them is actually better quality than you thought it was,” said Gavin Graham, chief investment officer at Guardian Group of Funds.

But Graham said that investors remained cautious of banking shares as “we saw a lot of landmines in the financial sector’s balance sheet.”

The materials sector, home to resource shares, led the downside, slipping 1.4 percent, while Fording Canadian Coal Trust FDG_u.TO slid after it reported a 57 percent drop in fourth-quarter profit.

The metallurgical coal producer also stayed quiet about a possible sale of its business. The company’s units were down C$2.66, or 5.8 percent, at C$43.34.

Miner Teck Cominco TCKb.TO fell C$1.45, or 4.2 percent, to C$33.10 the day after it said fourth-quarter profit fell 68 percent, hurt by one-time charges and lower zinc and coal prices.

Meanwhile, the sector’s subindex of gold producers was down 3 percent, as U.S. spot gold fell on profit-taking and a decline in demand from India.

Goldcorp (G.TO) was down C$1.39, or 3.7 percent, at C$35.90, while Kinross Gold (K.TO) slid 95 Canadian cents, or 4.1 percent, to C$21.98.

BlackBerry maker Research In Motion RIM.TO was down C$2.22, or 2.4 percent, at C$92.40 after a three-hour service disruption across the Americas on Monday cut access to wireless e-mail.

The energy group gave up 0.1 percent while the price of oil fell on easing worries that Venezuela would make good on its threat to halt shipments to the United States.

Canadian Natural Resources (CNQ.TO) bucked the trend, edging up 7 Canadian cents, or 0.1 percent, at C$62.83, despite saying that costs for its Horizon oil sands project have risen as construction has been hampered by severe cold.

However, the company also upped its estimate for the amount of cash it expects its operations to earn, amid stronger than expected oil and natural gas prices.

On the upside, the consumer staples sector rose 0.9 percent, while telecoms gained 1.3 percent.

$1=$1.00 Canadian Reporting by Leah Schnurr; Editing by Rob Wilson

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