August 28, 2008 / 1:28 PM / 11 years ago

Toronto stocks set for higher open with banks in focus

*RBC, TD, National Bank report results

*Strength in oil and gold may support TSX

TORONTO, Aug 28 (Reuters) - The Toronto Stock Exchange’s main index was set for a higher open on Thursday, buoyed by strength in commodity-related stocks and as investors digest quarterly results from the country’s banks including Royal Bank of Canada (RY.TO) which delivered stronger-than-expected results.

RBC said early on Thursday its third-quarter profit fell 10 percent, as it took capital markets charges and higher loan-loss provisions, largely in its U.S. banking operations. For details, see [ID:nN28260224]

Third-quarter net income slipped at Toronto-Dominion Bank (TD.TO), as a difficult capital markets environment reduced profit in its wholesale business, but the bank raised its dividend. [ID:nN28260111]

The last of Canada’s big six banks to report, National Bank of Canada (NA.TO) said that third-quarter profit climbed on better results in its financial markets and retail banking units, as well as a gain on a Canadian exchange merger. [ID:nN28266795]

“The financials are probably neutral to up,” said John Kinsey, portfolio manager at Caldwell Securities Ltd.

“Gold looks good so that part of the materials should be up,” he added. “Oil is up so that should auger well for the energy stocks.”

On Wednesday, Canadian Imperial Bank of Commerce (CM.TO) reported a write-down related to the troubled U.S. housing market that came in lower than analysts’ expectations, sending shares skyward.

The heavily-weighted financials sector also cheered the news, adding 2.5 percent.

Banks in Canada have been tangled in the downward momentum in the U.S. financial sector, but investor confidence got a boost on Wednesday after Fannie Mae FNM.N announced management changes, in a bid to better implement a plan to preserve capital and cut losses.

The S&P/TSX composite index .GSPTSE begins the day at 13,530.65, up 231.58 points, or 1.7 percent, boosted by resource and financial services stocks.

The heavyweight energy and materials sectors could see gains again, as oil rose for a fourth day, pushed up by the threat that Tropical Storm Gustav could damage U.S. oil installations.

Materials may also rise along with gold, supported by oil’s rise and a weakening U.S. dollar. Base metal prices were mixed.

In company news, Maple Leaf Foods (MFI.TO) will likely draw more attention after the head of Canada’s biggest meat processor said on Wednesday his company was fully accountable for a nationwide outbreak of listeriosis food poisoning, which has been linked to deaths of 15 people. [ID:nN27481519]

Maple Leaf shares rose almost 4 percent to C$8.29 on the Toronto Stock Exchange on Wednesday, but have lost more than 20 percent of their value since the recalls began on Aug. 17.

Linamar Corp (LNR.TO), which makes precision automotive components for engines and transmissions, could see activity after it said it will announce about 400 layoffs later on Thursday.

In New York, futures pointed higher on better-than-foreseen gross domestic product data. A separate report showed the number of U.S. workers filing new claims for jobless benefits fell last week to a level that was slightly lower than expected. ($1=$1.05 Canadian) (Reporting by Jennifer Kwan; Editing by Scott Anderson)

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