February 27, 2008 / 2:18 PM / 10 years ago

Stocks slip amid profit-taking, Nortel

TORONTO (Reuters) - The Toronto Stock Exchange’s main index finished little changed on Wednesday, weakened by profit-taking, while shares of Nortel and Magna weighed.

Both companies were among the biggest laggards by weight after reporting disappointing fourth-quarter results earlier in the day.

Nortel Networks Corp NT.TO shed C$1.53, or 13.7 percent, to C$9.68 after it posted a bigger loss due to a large tax charge. North America’s biggest telecom equipment maker, also said it will cut 2,100 jobs and move another 1,000 overseas.

Magna International MGa.TO slid C$1.49, or 1.9 percent, to C$78.51 after the autoparts maker said quarterly profit fell, hurt by charges and lower complete vehicle assembly sales.

The S&P/TSX composite index .GSPTSE closed down 18.63 points, or 0.14 percent, at 13,778.38 with all but two of its 10 main sectors in negative territory.

The Toronto benchmark has closed lower in just two out of the past eight sessions, and has climbed by about 7 percent in the last three weeks.

“When stocks move up quickly, they are vulnerable to be set back,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

“It still seems like there’s an undercurrent of positive momentum here, so I would say the mentality is ‘more buy on dips’ rather than ‘sell on strengths’.”

Canadian Imperial Bank of Commerce (CM.TO) also weighed on the TSX the day before the bank is set to report first-quarter results. CIBC finished down C$1.19, or 1.7 percent, at

C$69.00.

The country’s fifth-biggest bank has already announced writedowns of about $2.5 billion due to unhedged exposure to U.S. subprime mortgage securities as well as the falling value of protection from U.S. bond insurer ACA Financial Guaranty Corp. It has noted that more adjustments were possible for the first quarter.

“Banks are starting to report, (so) perhaps the market is a little tepid today in waiting for that to happen because undoubtedly there’s going to be some more writeoffs, and people are worried that they may be more sizable than previously expected,” said Michael Sprung, president of Sprung & Co. Investment Counsel.

Laurentian Bank of Canada (LB.TO) reported a 7 percent drop in first-quarter profit, due to an unfavorable tax adjustment, but said income would have risen 25 percent otherwise. Its shares rose C$1.71, or 4.4 percent, to C$40.50.

The materials sector gained 1.3 percent as its gold producers subindex moved up 2.2 percent. The price of gold jumped to a record high as the U.S. dollar sagged, moving as high as $964.70 an ounce before easing to $957.50.

Goldcorp (G.TO) rose C$1.10, or 2.7 percent, to C$42.54, while Barrick Gold (ABX.TO) added 90 Canadian cents, or 1.8 percent, to C$50.60.

Barrick said it had handed in an updated feasibility study on its jointly owned Pueblo Viejo project to the Dominican Republic’s government, and confirmed it and partner Goldcorp will spend about $2.7 billion to build the mine.

Elsewhere, Rona Inc RON.TO retreated 60 Canadian cents, or 4 percent, to C$14.24 after the home improvement retailer said it expects low single digit earnings growth in 2008 and 2009.

Market volume was 444.5 million shares worth C$7.2 billion. Decliners outpaced advancers 839 to 771. The blue chip S&P/TSX 60 index .TSE60 closed down 1.29 points, or 0.16 percent, at 807.76.

In New York, stocks also ended little changed, as an earlier rally evaporated on jitters over the state of the housing market. The Dow Jones industrial average .DJI finished up 9.36 points, or 0.07 percent, at 12,694.28 and the Nasdaq composite index .IXIC nudged up 8.79 points, or 0.37 percent, at 2,353.78.

($1=$0.98 Canadian)

Editing by Rob Wilson

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