May 29, 2009 / 2:57 PM / 10 years ago

CANADA STOCKS-TSX rises on commodity strength; banks weak

* TSX up 0.57 percent at 10,452.04

* Energy, materials up on firm oil and metals prices

* Financials fall 1 percent; RBC results weigh (Adds details, quotes)

By Jennifer Kwan

TORONTO, May 29 (Reuters) - Toronto’s main stock market index was higher on Friday morning as rising commodity prices lifted the resource-laden index after U.S. data fanned optimism about a global economic recovery.

Energy and materials shares, up 2 percent and 2.1 percent, respectively, led the index higher on a rise in oil and metals prices after U.S. data fanned hope about a global economic recovery. [ID:nSYD450019] [ID:nLT268826]

The U.S. economy contracted less than initially estimated in the first quarter, data showed, while corporate profits rebounded. [ID:nN29399341]

“Overall, the data looks like it’s pointing to maybe the economy is starting to stabilize a bit, particularly south of the border, which bodes well for commodities,” said Steve Ibel, institutional equities trader at Beacon Securities in Halifax, Nova Scotia.

At 10:29 a.m. (1429 GMT), the S&P/TSX composite index .GSPTSE was up 59.67 points, or 0.57 percent, at 10,452.04, with five of the its 10 main groups higher.

In see-saw action, the TSX shot up nearly 1 percent at the start of the session, but quickly dipped into negative territory before rising again.

Suncor Energy (SU.TO) rose 3 percent to C$39.92, and Barrick Gold (ABX.TO) climbed 2.4 percent to C$42.47.

The gains were kept in check as financial stocks dropped 1 percent after Royal Bank of Canada (RY.TO) reported a quarterly loss on Friday, reflecting a previously announced C$1 billion writedown for a drop in the value of the bank’s U.S. assets and a rise in provisions for bad loans. [ID:nN25399893]

Shares of Royal Bank dropped 3 percent to C$44.16.

“They have the write-off in this quarter and that makes people nervous thinking maybe they have a write-off in the next quarter,” said John Kinsey, portfolio manager at Caldwell Securities Ltd.

Investors were also concerned about loan loss provisions and credit deterioration, said John Aiken, an analyst with Dundee Securities, who maintained his “sell” recommendation on the bank.

Four Canadian banks reported results on Thursday that were stronger than expected, even as they set aside more money to cover bad loans. [ID:nN28311974]

But most of the banks were lower on Friday, including Canadian Imperial Bank of Commerce (CM.TO), down 1.4 percent at C$53.73, and Bank of Nova Scotia (BNS.TO), which fell 0.8 percent to C$37.61.

$1=$1.10 Canadian Reporting by Jennifer Kwan; editing by Peter Galloway

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