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By Wojtek Dabrowski
TORONTO, Jan 14 (Reuters) - The benchmark index of the Toronto Stock Exchange finished higher on Monday as resource and energy issues offset a disappointing performance from the financial sector, which continued to waver in the face of the global credit crisis.
The S&P/TSX composite index .GSPTSE rose 65.71 points, or 0.48 percent, to close at 13,698.28.
Gold surged to a historic high above $910 an ounce on a weaker U.S. dollar and expectations of a U.S. interest rate cut, lifting with it the TSX’s resource-laden materials sector, which added 2.32 percent.
Financials dragged on the broader index, shedding 1.07 percent on the day. Shortly before the end of the session, Canadian Imperial Bank of Commerce (CM.TO) said it will take US$1.6 billion in after-tax writedowns related to its involvement in the battered U.S. subprime mortgage market. It also plans to raise C$2.75 billion to shore up its balance sheet.
It stock was last at C$72.07, up 76 Canadian cents, before being halted.
“I think the financial sector had a tougher time today, to put it mildly, and I think that’s a reflection of the risks that are pretty severe in this business,” said Glenn MacNeill, vice-president of investments at Sentry Select Capital Corp.
Energy shares also helped prop up the Toronto market, rising 1.37 percent.
Overall, six of the composite’s 10 main subgroups moved higher. The S&P/TSX 60 index of Canadian blue chips added 3.18 points, or 0.4 percent, to close at 805.33.
Among resource shares, Inmet Mining IMN.TO rose C$1.76, or 2.42 percent, to C$74.57. Teck Cominco TCKb.TO added 90 Canadian cents to finish at C$35.25.
However, the credit crunch brought on by trouble in the U.S. housing market continued to loom large with CIBC’s announcement.
The news could end up improving investor confidence, assuming that most of the worst is over, said John Kinsey, portfolio manager at Caldwell Securities Ltd.
“If there aren’t going to be any more writeoffs, then it’s a positive ... and we can go forward from here,” he said. “Boy, it’s certainly been a mess.”
CIBC and a number of large financial institutions in the United States have found themselves faced with billions in writedowns related to subprime exposure. Observers have speculated there are additional heavy losses yet to be announced.
“Clearly, the market is very worried that this thing is halfway through,” MacNeill said, adding he expects other banks to raise money in a bid to bolster their finances.
In the United States, the main markets rallied on Monday, with the Dow Jones industrial average .DJI leaping 171.85 points, or 1.36 percent, to close at 12,778.15. The tech-heavy Nasdaq market rose 38.36 points, or 1.57 percent, to end at 2,478.30. ($1=$1.02 Canadian) (Reporting by Wojtek Dabrowski; Editing by Peter Galloway)