July 18, 2008 / 9:36 PM / 11 years ago

UPDATE 3-Financials, oils give boost to Toronto stocks

(Adds details, quotes)

* TSX ends higher but trims gains with oil sector

* Financials gain on upbeat U.S. bank results

* Index ends week down 1.4 percent

By Leah Schnurr

TORONTO, July 18 (Reuters) - The Toronto Stock Exchange’s main index pushed higher on Friday, supported by energy shares, while financials were buoyed as another U.S. bank posted better than expected quarterly results.

The benchmark trimmed earlier gains as the energy sector — a key pillar of the index, along with financials — eased as the price of oil retreated in the afternoon.

The heavyweight financial sector, which has absorbed the brunt of the fallout from the credit crunch, jumped more than 10 percent in the past three sessions, buoyed by results from banks south of the border that were not as bad as expected.

On Friday, Citigroup (C.N), the largest U.S. bank by assets, reported a smaller than expected loss, helping to lift investor confidence in the financial markets.

“I feel like you cannot have a strong stock market unless people feel comfortable with the financial system, and the banks are the financial system,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

The S&P/TSX composite index .GSPTSE closed up 55.71 points, or 0.41 percent, at 13,515.96 with all but three of its 10 main sectors looking up.

Bank of Montreal (BMO.TO) rose 98 Canadian cents, or 2.2 percent, to C$45.96, and Canadian Imperial Bank of Commerce (CM.TO) added 66 Canadian cents, or 1.2 percent, to C$57.76. The sector overall gained 0.9 percent.

For the year, the banks are still down more than 14 percent, and analysts remained wary that the rally could be short-lived.

“People are trying to be more optimistic, but there’s undoubtedly some more bad news to come between now and the end of the year,” said Michael Sprung, president at Sprung & Co. Investment Counsel.

“The market’s just been so overly reactive. You get a couple of the financial institutions with earnings that aren’t as bad as expected and people get a little carried away.”

The energy sector added 0.8 percent, with EnCana (ECA.TO) ahead 81 Canadian cents, or 1 percent, at C$78.81, and Imperial Oil (IMO.TO) up 44 Canadian cents, or 0.9 percent, at C$48.84.

The sector had benefited from a rise in oil early in the session, but the commodity later turned around amid demand concerns, as well as easing tension between Iran and the West.

Crude fell for a fourth straight day, settling down 41 cents, or 0.32 percent, at $128.88 a barrel. The price has dropped nearly 13 percent from last week’s high above $147.

The materials sector fell 0.8 percent, while miners were taken lower by weak prices for gold and other metals.

Declines in fertilizer companies also took the group lower, with Potash Corp of Saskatchewan POT.TO down C$4.15, or 1.9 percent, at C$211.16, and Agrium AGU.TO off C$1.28, or 1.3 percent, at C$93.96.

The TSX composite was off 1.4 percent for the week and has shed 6.6 percent so far in July, a month that has seen it battered by more worries over the health of financials and stung by falling crude prices.

Market volume was 331 million shares worth C$7.1 billion. Advancers outpaced decliners 851 to 674. The blue chip S&P/TSX 60 index .TSE60 closed up 3.26 points, or 0.4 percent, at 808.83.

On Wall Street, technology stocks hurt the Nasdaq composite index .IXIC after disappointing earnings from Google (GOOG.O) and Microsoft (MSFT.O), while a gain in Citigroup’s shares propelled the Dow Jones industrial average .DJI higher.

The Nasdaq closed down 29.52 points, or 1.28 percent, at 2,282.78, and the Dow was up 49.91 points, or 0.44 percent, at 11,496.57.

$1=$1.01 Canadian Editing by Rob Wilson

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