*Banks stocks may rise after RBC results
*Resources may drag
TORONTO, May 29 (Reuters) - The Toronto Stock Exchange’s main index was set for a mixed start on Thursday after Royal Bank of Canada (RY.TO) and National Bank of Canada (NA.TO) reported profit drops, which were expected, and resources dragged.
Royal Bank, Canada’s biggest bank, said its second quarter profit fell 27 percent as a result of writedowns that the market expected. Adjusted for the writedowns and some other items, the bank’s earnings may have beat estimates, readying its stock for an early rise. See: [nN29370316]
National Bank, meanwhile, reported a 29-percent profit drop due to losses related to asset-backed commercial paper holdings. See: [nN29371856]
The news stream means attention will be on the TSX financial services sector, which accounts for about 28 percent of the overall Canadian index, and which is relatively flat so far in May.
“Canadian retail banking continues to measure 15 percent growth, and that’s what you’ve seen from the other banks in general,” said Gavin Graham, chief investment officer at Guardian Group of Funds, of the big banks’ quarterly results.
“The banks have generally been in line with expectation, maybe a bit worse.”
Resource shares, which account for nearly half the index and which mounted a late-day rally in the previous session, may weaken along with the prices of crude oil and spot gold.
The TSX was seen drawing little direction from U.S. data, which showed jobless claims last week were slightly higher than expected while the economy grew slightly more than expected in the first quarter -- a mixed bag for stocks. See: [nN29267961] and [nN28432824]
Elsewhere, BCE Inc BCE.TO, the telecom firm embroiled in a court battle over its proposed C$34.8-billion ($35.5-billion) buyout, said late on Wednesday it was vital that the Supreme Court of Canada hear an appeal of a lower court decision, which last week threw the buyout into question. See: [nN28447030]
In the industrials sector, ACE Aviation Holdings Inc ACEa.TO took the widely expected step of selling its remaining stakes in Aeroplan Income Fund AER_u.TO and Jazz Air Income Fund JAZ_u.TO. See: [nN28449174]
The S&P/TSX composite index .GSPTSE starts the day at 14,688.62 after reversing course and rising 166.49 points, or 1.15 percent, in the previous session.
$1=$0.98 Canadian Reporting by Jonathan Spicer; editing by Renato Andrade