*TSX rebounds from 1-week low
* Ends down 0.12 pct at 13,892.57, 7 sectors fall
* Fed signals no rush to scale back US economic support
* Market cautious about idea of strong NDP showing (Adds details)
By Ka Yan Ng
TORONTO, April 27 (Reuters) - Toronto’s main stock index closed lower on Wednesday but cut most of its early-session losses, comforted by a bounce-back in gold-mining issues and signals from the Federal Reserve that it would maintain its support for the U.S. economy.
The index took its cue from Wall Street and oil prices, both of which nudged higher after the Fed said in a statement that it believed the economic recovery was proceeding at a moderate pace, with little risk that an inflationary psychology would take hold. Gold also rose to a record high of almost $1,530 an ounce and silver jumped 6 percent. [ID:nN26291565]
After a two-day meeting, the policy-setting Federal Open Market Committee said it intends to complete its $600 billion bond-buying program in June as scheduled.
Fed Chairman Ben Bernanke’s first-ever press conference resulted in no serious wavering in optimism, while earnings reports in both Canada and the United States impressed investors.
“I think some of the news that we saw today implies the market is going to continue to grow moderately,” said Pat McHugh, senior portfolio manager and equity strategist at Manulife Asset Management. “If anything, I think consensus opinion is that the pace of economic growth is going to slow as we proceed through 2011 and that nothing we see today really changes any of that.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE finished just 16.53 points lower, or 0.12 percent, at 13,892.57, rebounding strongly after falling nearly 1 percent to 13,770.81, its lowest point in a week. Seven of the TSX’s 10 sectors ended lower.
The materials group ended up 0.61 percent, and its gold-mining subgroup finished 1.66 percent higher after seesawing through the session.
Barrick Gold Corp (ABX.TO) had been a top decliner after announcing on Monday a friendly C$7.3 billion deal to buy copper miner Equinox Minerals EQN.TO, but finished up 1.24 percent at C$48.34. It reported a 22 percent increase in quarterly profit on Wednesday, driven largely by the surge in bullion prices. [ID:nN27110953]
Other gold producers were also up, with Kinross (K.TO) up 2.8 percent at C$14.90 while Eldorado Gold (ELD.TO) added 2.87 percent to C$17.20.
More corporate earnings also trickled in, including Husky Energy Inc HSE.TO, which reported a 70 percent jump in first-quarter profit, sending its shares up 0.77 percent to C$28.71.
The rising popularity of the New Democratic Party in the lead-up to Canada’s May 2 election was cited as one reason for early weakness on the overall index.
The increasing support for a left-leaning party that plans to raise corporate taxes, spend more and redo energy policy could cause some further short-term weakness in Toronto’s main stock index, analysts said. [ID:nN27126329]
“The Conservatives may get a majority on election day but right now it looks like another minority Conservative government ... Nobody wants another election, we’ve had so many, so that’s the discouraging part of it,” said John Kinsey, portfolio manager at Caldwell Securities.
But corporate results are likely to trump any short-term weakness drawn from federal election betting, said McHugh, noting that Toronto’s main index has lagged its U.S. peers in recent sessions because its earnings season has not run as deep yet. U.S. earnings have had a positive effect on U.S. indexes.
“I see no reason why things should be different in Canada. We should be experiencing as well good earnings results and the market will focus on that,” he said. “So the market isn‘t, in my mind, going to pay a lot of attention to the fact that the NDP are in second place.”
($1=$0.95 Canadian) (Reporting by Ka Yan Ng; editing by Peter Galloway and Rob Wilson)