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TORONTO, Jan 25 (Reuters) - The Toronto Stock Exchange’s main index reversed direction on Friday and turned lower, taking back strong early gains in a sell-off sparked by falling financials shares.
Market rumors of possible profit warnings from Europe’s ING ING.AS and Fortis FOR.BR shook financials, but Fortis said it was unaware of any reason for the drop in its stock.
In Toronto, the banking sector was down 1.1 percent. Toronto-Dominion Bank (TD.TO) dropped after Commerce Bancorp Inc (CBH.N), which is being bought by TD, said its fourth-quarter profit fell, while credit losses quintupled. TD was off C$1.21 Canadian cents, or 1.8 percent, at C$66.09.
Also in the sector, Royal Bank of Canada (RY.TO) slipped 68 Canadian cents, or 1.4 percent, to C$49.30.
“If you look at the financial sector in general - whether it’s Commerce or bond insurers or subprime lenders - there’s very little good news on that front,” said Levente Mady, broker at MF Global Canada, in Vancouver, British Columbia.
“Canadian banks are relatively problem-free, even in the global picture. But on the other hand, the stock prices of the big six banks have certainly pulled back considerably, and that’s a sign of the times.”
The S&P/TSX composite index .GSPTSE was down 49.08 points, or 0.38 percent, at 12,858.19 with eight of its 10 main groups in negative territory. In a volatile session, the index had jumped more than 200 points just after the open.
The heavyweight energy sector also reversed course, falling 0.3 percent, while Husky Energy (HSE.TO) was down C$1.39, or 3.4 percent, at C$39.76, and Petro-Canada PCA.TO lost 79 Canadian cents, or 1.7 percent, to C$46.18.
The consumer staples group was down 0.8 percent, while the telecoms sector gave up 1.1 percent.
The materials group remained on the upside, gaining 1.2 percent, while Potash Corp of Saskatchewan POT.TO rose C$4.05, or 3.1 percent, to C$133.98 a day after the world’s biggest fertilizer producer doubled its fourth-quarter profit and gave a robust forecast for 2008.
The index has swung wildly week, moving in a range of close to 1,200 points amid continuing uncertainty over the health of the U.S. economy and what that could mean for global growth.
Rick Hutcheon, president and chief operating officer at RKH Investments, said the index was also seeing some profit-taking as investors remained wary of more bad news.
“It shouldn’t be much of a surprise to see the market take a step back after some of the gains we’ve (had this week),” Hutcheon said.
$1=$1.01 Canadian Reporting by Leah Schnurr and Jonathan Spicer; Editing by Peter Galloway