August 26, 2008 / 9:24 PM / 10 years ago

UPDATE 3-Toronto stocks inch up, but banks weigh

* TSX ends little changed as financials offset oils

* Banks slide after weaker than expected results

* Energy shares give lift as oil prices rise (Adds details, quotes)

By Leah Schnurr

TORONTO, Aug 26 (Reuters) - The Toronto Stock Exchange’s main index ended little changed on Tuesday as energy shares rose along with oil prices and managed to offset a weak banking sector that was hit by lackluster quarterly results.

Kicking off the round of earnings reports for the major banks, Bank of Nova Scotia (BNS.TO) and Bank of Montreal (BMO.TO) both slid after they posted profits that came in below already lowered expectations. For details, see: [ID:nN26504059].

Scotiabank, Canada’s third largest bank, fell 2.5 percent to C$46.45 after it said its profit skidded 2 percent, as provisions for credit losses climbed and revenue from capital markets fell.

BMO eased 0.3 percent to C$43.94 as its profit tumbled 21 percent, while it also had larger loan-loss provisions due to weak U.S. real estate markets. The stock sagged as much as 4 percent earlier in the session.

The underwhelming performances helped knock 1.1 percent off the TSX financial sector, and analysts said the earnings likely set the tone for what can be expected throughout the week as the rest of the major banks announce results.

“We’re struggling and trying to take our cue in terms of where do we go next,” Levente Mady, a broker at MF Global Canada in Vancouver, said of the market overall.

“I don’t think the fundamental picture is improving at all, so I don’t really see much of an upside for stocks in general going forward the next month or two.”

The S&P/TSX composite index .GSPTSE closed up 10.11 points, or 0.08 percent, at 13,299.07 with half of its 10 main sectors in positive territory.

Mady said that financials were also weighed down by continuing fears of more global fallout from the credit crunch. Worries also spilled over the border from the United States after a report showed the number of problem U.S. banks is growing.

“It almost seems like what’s happening in Canada doesn’t really matter — it’s just a global picture of the marketplace, as far as financials are concerned,” said Mady.

A 1.4 percent gain by the heavyweight energy sector helped keep the index above water as oil rose above $116 a barrel on growing worries that Hurricane Gustav could threaten U.S. oil and natural gas installations in the Gulf of Mexico.

Canadian Natural Resources (CNQ.TO) was up 1.7 percent at C$87.55, while Imperial Oil (IMO.TO) rose 2.2 percent to C$53.98.

Shares of Maple Leaf Foods (MFI.TO) skidded further, dropping 9.2 percent to C$7.99, after deli meats produced at a Toronto plant were linked to an outbreak of food poisoning that has left 12 people dead.

Maple Leaf said on Tuesday that it has delayed re-opening the plant in order to finish the disassembly of equipment and further tests. See: [ID:nN26522010].

Soft drink maker Cott Corp (BCB.TO) shed 15.9 percent to C$2.17 after it lowered its 2008 profit outlook, citing declining sales volumes and rising packaging costs. See: [ID:nN26333641].

Market volume was 300 million shares worth C$5 billion. Decliners outpaced advancers 778 to 724. The blue chip S&P/TSX 60 index .TSE60 closed up 0.18 point, or 0.02 percent, at 793.77.

In New York, oil prices also gave a boost to energy companies, helping the Dow Jones industrial average .DJI close up 26.62 points, or 0.23 percent, at 11,412.87, while the Nasdaq composite index .IXIC slipped 3.62 percent, or 0.15 percent, to 2,361.97. ($1=$1.05 Canadian) (Editing by Rob Wilson)

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