July 31, 2008 / 3:35 PM / 11 years ago

UPDATE 1-Financials, Goldcorp help lift Toronto stocks

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* TSX supported by financials, merger news

* Goldcorp to buy Gold Eagle Mines for C$1.5 bln

* Energy stocks fall with oil price retreat

TORONTO, July 31 (Reuters) - The Toronto Stock Exchange’s main index regained early losses to move slightly higher on Thursday morning, pulled up by stronger financials and merger news in the gold mining sector.

Energy stocks, which fell 1.8 percent as oil eased to around $124 a barrel, had earlier helped drive the TSX down by 100 points.

Imperial Oil Ltd (IMO.TO) slipped 75 Canadian cents, or 1.5 percent, to C$50.83. Canada’s No. 2 oil exploration and refining firm is expected to report quarterly results later in the day.

“I think we had a good jump yesterday,” said Michael Sprung, president at Sprung & Co. Investment Counsel of the index’s 340-point rise on Wednesday. “It opened up with a lot of people trying to get ahead and taking profits.”

The S&P/TSX composite index .GSPTSE was up 11.38 points, or 0.08 percent, at 13,694.59, with six of its 10 main groups higher.

However, merger news was expected to help boost investor sentiment, added Sprung.

Goldcorp (G.TO) said on Thursday it planned to buy Gold Eagle Mines GEA.TO for about C$1.5 billion to pick up the Bruce Channel gold discovery, an exploration property that lies close to Goldcorp’s flagship Red Lake operation.

Shares of Goldcorp were down 52 Canadian cents, or 1.3 percent, at C$39.35 on the news. Gold Eagle, the most heavily traded stock by volume, was up C$1.79, or 16.93 percent, at C$12.36.

Shares of Barrick Gold Corp (ABX.TO) rose 20 Canadian cents, or 0.45 percent, to C$43.56 after the world’s top gold miner said quarterly profit climbed 22 percent, as higher gold prices outpaced the rising costs of production.

The broader materials group was off 0.2 percent after making gains earlier in the session.

The heavily weighted financials rose 1.2 percent, shrugging off weak economic data from both sides of the border, as investors switched from cyclical stocks to safer bets.

Canadian economic growth shrank unexpectedly in May, Statistics Canada said on Thursday, while U.S. data showed the American economy grew less than expected in the second quarter, and showed a jump in weekly jobless claims.

Sun Life Financial Inc (SLF.TO) rose 52 Canadian cents, or 1.2 percent, to C$42.89, as investors awaited its second-quarter results. ($1=$1.02 Canadian) (Reporting by Jennifer Kwan)

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