* TSX up 0.5 pct to 13,845.31, highest point since May 3
* Energy, materials lead charge higher
* RBC’s profit rise shy of forecasts, shares fall (Adds details)
TORONTO, May 27 (Reuters) - Toronto’s main stock index climbed to its highest point in more than three weeks on Friday morning as rallying commodity prices pushed up resource issues, overcoming a big drop in Royal Bank of Canada shares.
A deepening retreat for the U.S. dollar helped push up oil, gold and other commodity prices, sending the index’s key energy and materials groups, as well as the main index, to their highest levels in more than three weeks.
Energy was up 0.8 percent, and materials gained 1.26 percent. The move was supported by diversified miner Teck Resources TCKb.TO, up 3.1 percent at C$50.66, while Suncor Energy (SU.TO) advanced 0.9 percent to C$41.47.
“The commodities certainly are driving the market today,” said Michael Sprung, president of Sprung & Co Investment Counsel.
Canadian Pacific Railway (CP.TO) and Canadian National Railway (CNR.TO), were also key advancers, reflecting optimism about the economy. Railways are often a barometer of the health of economy because their operations reflect economic activity.
“There seems to be a general sense that the economy continues to muddle along here,” Sprung added.
At 10:30 a.m., the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was up 69.41 points, or 0.5 percent, at 13,845.31. Nine of its 10 main sectors advanced.
The index’s financial group was the lone decliner, down 0.66 percent, partly because of an index-leading drop of 2.8 percent to C$57.52 in Royal Bank of Canada (RY.TO) shares.
The bank, the country’s largest, reported a 13 percent increase in quarterly profit, driven by strength in its Canadian business, but its results fell well short of expectations due to weakness in other segments. It also raised its dividend, as expected. [ID:nN27293256]
RBC’s disappointing results came just a day after smaller rivals Toronto-Dominion (TD.TO) and CIBC (CM.TO) reported weaker-than-expected profits that sent Canadian bank stocks tumbling. [ID:nN26238530]
Several analysts cut share-price targets on CIBC, while TD received a pair of raises and one reduction. CIBC shed 1.66 percent to C$79.81, while TD was off 0.3 percent at C$83.72. [RCH/CA]
“People are a little disappointed in the results as they’ve been coming out. They’ve been on the low end of estimates. But overall they’re not too bad. We are getting the dividend increases that we wanted to see,” Sprung said.
Research In Motion RIM.TO, down 1.4 percent at C$42.11, was the second-biggest drag on the index, though five times less than Royal, as the BlackBerry maker said a lawsuit had been filed against it in New York. It said the suit is without merit.
The lawsuit alleges the company and some of its officers made materially false and misleading statements regarding the company’s financial condition and business prospects, between Dec. 16, 2010 and April 28, 2011. [ID:nN27289220]
$1=$0.98 Canadian Reporting by Ka Yan Ng; editing by Peter Galloway