February 14, 2008 / 9:07 PM / in 10 years

Financials and U.S. worries sting Toronto stocks

TORONTO (Reuters) - The Toronto Stock Exchange’s main index retreated on Thursday, dragged down by a selloff in financial and materials issues, amid persistent uneasiness about the outlook for the U.S. economy.

<p>A man walks past a sign showing the results of the Toronto Stock Exchange in Toronto August 16, 2007. REUTERS/Peter Jones</p>

Sun Life Financial Inc (SLF.TO) was one of the biggest weights on the TSX, after its fourth-quarter profit missed the Street’s expectations. Canada’s third-largest life insurer, fell C$1.79, or 3.6 percent, to C$47.37, while the financial sector gave up 1.2 percent on credit market worries.

Toronto-Dominion Bank (TD.TO) slid 96 Canadian cents, or 1.4 percent, to C$65.54 and Bank of Montreal (BMO.TO) fell 67 Canadian cents, or 1.2 percent, to C$54.50.

The materials sector sagged 0.9 percent, while shares of Lundin Mining Corp (LUN.TO) dove after the company gave revenue and production forecasts that it said were lower than analysts had been expecting. The base metal miner was down 96 Canadian cents, or 11 percent, at C$7.75.

North American markets reacted negatively to comments from U.S. Federal Reserve Chairman Ben Bernanke, who kept the door open to more interest rate cuts, but said the outlook for the U.S. economy had worsened in recent months and that risks to growth had increased.

However, Bernanke said he expects an uptick in growth in the second half of the year.

The S&P/TSX composite index .GSPTSE closed down 74.27 points, or 0.56 percent, at 13,208.03 with seven of its 10 main groups lower. It had closed up nearly 200 points on Wednesday, and is up 1.7 percent so far for the week.

“I think today is a bit of a consolidation of yesterday’s gains. Having said that, I think the reaction today is a direct response to Bernanke’s comments in the States,” said Rick Hutcheon, president and chief operating officer at RKH Investments.

“The market has decided to look at his comments and focus more on the negatives than the constructive elements of what he’s saying, and that’s a function of the kind of market we’re in right now ... but I think the reaction to his statements is a bit harsh.”

The energy sector was the strongest throughout the day, but finished up just 0.3 percent after earlier climbing as much as 1.2 percent on rising crude and natural gas prices.

The sector also got a boost from EnCana Corp (ECA.TO), Canada’s largest oil and gas company, which rose 77 Canadian cents, or 1.1 percent, to C$70.77, after its profit jumped 63 percent on climbing prices and production.

Also on the earnings front, food processor and distributor George Weston Ltd (WN.TO) slipped 34 Canadian cents, or 0.7 percent, to C$50.06 after its profit missed expectations.

Angiotech Pharmaceuticals Inc ANP.TO gave up 25 Canadian cents, or 7.6 percent, to C$3.05 after its fourth-quarter loss nearly doubled, hurt by falling royalty revenues for its drug-coated stents.

Flight simulator maker CAE Inc (CAE.TO) bucked the downward trend, rising 40 Canadian cents, or 3.3 percent, to C$12.50 after its third-quarter earnings rose 33 percent on strong demand.

Market volume was 357 million shares worth C$6.3 billion. Advancers outpaced decliners 791 to 779. The blue chip S&P/TSX 60 index .TSE60 closed down 5.51 points, or 0.71 percent, at 771.75.

On Wall Street, stocks tumbled sharply amid Bernanke’s comments and worries of a crumbling credit market after Moody’s Investors Service cut its rating on bond insurer FGIC Corp. The move fueled fears of more writedowns from banks that own securities covered by the company.

The Dow Jones industrial average .DJI sagged 175.26 points, or 1.4 percent, to 12,376.98, and the Nasdaq composite index .IXIC was down 41.39 points, or 1.74 percent, to 2,332.54.

($1=$1.00 Canadian)

Editing by Rob Wilson

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