June 17, 2011 / 4:40 PM / 8 years ago

CANADA STOCKS-Banks drive TSX higher as RIM dives

   * TSX up 34.33 points, or 0.27 pct, at 12,887.46
 * Eight of the 10 main groups higher
 * RIM down more than 20 percent  (Updates with details and analyst’s comments)
 By Trish Nixon
 TORONTO, June 17 (Reuters) - Toronto’s main stock market index was higher at midday on Friday as hints of an aid deal for Greece brightened market sentiment and helped spur a broad rally led by banks, which offset a plunge in Research In Motion RIM.TO shares.
 The financial sector led the index with a rise of 0.54 percent. Royal Bank of Canada (RY.TO) was the most influential gainer, climbing 1.47 percent to C$54.48 after reports said it may have found a buyer for its U.S. retail banking operations. [ID:nN17173029]
 Limiting the TSX’s gain was a 22 percent drop in RIM shares to C$26.81 after it posted weak quarterly results and lowered its forecasts late on Thursday. The results prompted analysts to downgrade the BlackBerry maker’s stock and cut price targets. [ID:nL3E7HH1AW]
“The whole street is talking about Research In Motion’s earnings, the negative guidance from yesterday. That’s nearly 30 basis points impact on the whole index,” said Francis Campeau, a broker at MF Global Canada. “On the positive side, I think the market likes the fact that RBC is finally selling their U.S. retail unit. RBC’s positive impact is making up about half of RIM’s negative.”
 At 11:55 a.m. (1530 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was up 34.33 points, or 0.27 percent, at 12,887.46. Eight of the index’s 10 main groups were higher.
 The TSX rallied along with global investor sentiment after leaders of France and Germany said they were united behind a new aid deal to save Greece from default. [ID:nLDE75G0ZQ]
 Some positive U.S. data supported the gains as a key gage of future economic activity rose more than expected in May. [ID: nN17281627]
 The index’s materials sector recovered from a dramatic day of losses on Thursday, gaining 0.18 percent, and helped to drive the index up.
 Campeau saw commodity prices and optimism over the Greek debt crisis as driving factors for the gains.
 “Commodities are back up, we’ve heard some sort-of calming speeches from European leaders in regards to Greece.” He added that whether the gains hold will depend on how the European drama plays out.
 “The story is not clear, and until the final story is clear, the market might continue to be choppy.”
 Shares of Celestica (CLS.TO), whose major customer is Research In Motion, slid 8.56 percent to C$7.80 after Paradigm Capital cut its share-price target to $12 from $14.
 Canadian National Railway (CNR.TO) was up 1.87 percent at C$74.47, making it the second most influential gainer on the index. Canada’s biggest railway rebounded after its shares fell on Thursday on news that it will sell assets of an indirect subsidiary and enter a 10-year coal transportation agreement. [ID nL3E7HG284]
 ($1=$0.98 Canadian)  (Reporting by Trish Nixon; editing by Peter Galloway)                                        

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