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TORONTO, March 26 (Reuters) - The Toronto Stock Exchange’s main index was little changed on Wednesday morning as concern about whether the buyout of BCE Inc BCE.TO will proceed was offset by gains in resource shares.
Telecom company BCE was among the biggest drags on the index as worries that the C$34.8-billion buyout was on shaky ground were heightened by worries over two other big corporate takeovers.
Shares of BCE were down C$1.06, or 2.9 percent, at C$35.63 even though a spokesman said on Tuesday that the buyout is still on track. But concerns about the future of a $20-billion leveraged buyout of U.S. radio operator Clear Channel Communications CCU.N added to the sour mood as several of the banks involved in financing the Clear Channel deal are also providing funding for the BCE deal.
Pessimism over more fallout from the credit crunch was also intensified as a takeover of Anglo-Swiss miner Xstrata XTA.L by Brazil’s Vale VALE5.SA collapsed.
“I think it’s continuing worries of stresses in the credit markets and, specifically in Canada, it’s the BCE situation,” said Rick Hutcheon, president and chief operating officer at RKH Investments. “People are going to worry that that may yet come apart.”
The S&P/TSX composite index .GSPTSE was down 15.63 points, or 0.12 percent, at 13,306.59, with all but two of its 10 main groups lower.
The financials sector led the way down, hurt by the credit woes, as National Bank of Canada NA.TO fell C$1.32, or 2.7 percent, to C$47.20, and Bank of Montreal BMO.TO gave up C$1.30, or 2.8 percent, at C$45.63. The group was down 1.6 percent.
The resource sectors put some shine on the index as commodity prices climbed. Imperial Oil IMO.TO added C$1.21, or 2.3 percent, to C$54.00, while Barrick Gold ABX.TO was up 60 Canadian cents, or 1.4 percent, at C$44.75. The energy and materials sectors gained 1.9 percent and 0.5 percent respectively.
“It’s becoming a very simple story where the banks constantly drag us down and the resources try to prop us up,” Hutcheon said.
AGF Management AGFb.TO was able to buck the downward trend of the financial sector, gaining 76 Canadian cents, or 3.7 percent, to C$21.08 after it said first-quarter profit nearly doubled and it bumped its dividend up by 25 percent.
$1=$1.02 Canadian Reporting by Leah Schnurr and Jonathan Spicer; Editing by Peter Galloway