January 16, 2009 / 10:23 PM / 10 years ago

CANADA STOCKS-TSX ends higher after volatile session; golds rise

* Materials, energy lead to overcome financials drag

* Gold issues shine for second consecutive session

* TSX nearly flat so far this year (Updates to closing prices, adds analyst comment)

By Ka Yan Ng

TORONTO, Jan 16 (Reuters) - Toronto’s key stock index finished higher on Friday after a seesaw session in which the financial sector was pressured by heightened concern about the health of the U.S. banking sector.

The heavyweight financial sector started the session with a quick rally, bolstered by the news that Bank of America (BAC.N) will receive a bailout from the U.S. government.

But the early gain fizzled and became the main drag on the index, which otherwise advanced in key sectors such as materials and energy.

The financial sector finished down 1.45 percent as the market judged the rescue plan was not enough to overcome signs of more fallout from the credit crisis for the financial sector.

“There are still problems out there in terms of financial system so it will reflect upon financial service companies regardless of jurisdiction,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

Four financial services companies were the top index movers to the downside. Among the key stocks that limited the market’s climb were Bank of Nova Scotia (BNS.TO), down 2.9 percent at C$30.45, and Toronto-Dominion Bank (TD.TO), down 0.8 percent at C$43.70.

Also weighing on the banking sector was news that Royal Bank of Canada (RY.TO), TD Bank and Laurentian Bank of Canada (LB.TO) were all downgraded by Dundee Securities. [ID:nBNG90848]

Still, seven of the index’s 10 main groups finished higher, banding together to push the index to finish the week on a bright note.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed up 0.46 percent, or 40.79 points, at 8,920.40.

The energy and materials groups, which together account for about 40 percent of the overall index, were volatile components as they tracked the choppy price movements of crude oil and other commodities.

Both sectors managed to overcome the drag from the TSX’s financial group slide. The materials group was up 3.6 percent and energy was up 0.8 percent.

Key issues helping to keep the TSX afloat were gold issues, which advanced strongly for a second consecutive session on firmer gold prices. Kinross Gold (K.TO), the most influential advancer, gained 7.42 percent to C$22.45. Goldcorp (G.TO) rose 4.44 percent to C$32.90.

Toronto’s key index charged out of the gate in 2009 with a string of solid gains that had it up 5.76 percent at one point last week. But a bout of selling this week, followed by a rebound, has left the index almost flat for the year.

Portfolio manager John Kinsey said a positive session on Friday might indicate that the market had had “quite a good shakeout” earlier this week and could now be set up for the possibility of revisiting the highs from the month.

“And if we can keep oil and gold up, that’s going to be a big help and will be a step in the right direction,” said Kinsey, a portfolio manager at Caldwell Securities Ltd. (Reporting by Ka Yan Ng; editing by Jeffrey Hodgson)

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