Toronto stock market rises amid strong bank earnings, lower commodities

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A man walks past a building in Toronto that used to house the Toronto Stock Exchange on August 18 2011. THE CANADIAN PRESS/Aaron Vincent Elkaim

TORONTO - The Toronto stock market closed higher Thursday amid a mixed reception to a string of positive earnings reports from Canada's big banks and generally lower commodities.

The S&P/TSX composite index was 89.44 points higher at 12,821.83, held back by lower gold stocks, while the TSX Venture Exchange rose 2.24 points to 1,133.36.

The Canadian dollar was down 0.79 of a cent to 96.96 cents US, its lowest level since late June 2012, as the latest reading showed the country's current account deficit remained at near record levels for a third straight quarter.

U.S. indexes also advanced as the latest look at fourth-quarter economic growth was disappointing while an important reading of the manufacturing sector in the American Midwest made a strong showing.

The U.S. economy grew at a 0.1 per cent annual rate from October through December, the weakest performance in nearly two years. The U.S. Commerce Department's revision to fourth-quarter growth was only slightly better than its initial estimate that the economy shrank at a rate of 0.1 per cent. And it was well below the 3.1 per cent growth rate reported for the July-September quarter.

Other data showed that the Chicago purchasing managers index moved further into expansion territory, up 1.2 points to an 11-month high of 56.8.

The Dow Jones industrials closed down 20.88 points to 14,054.49. The Nasdaq composite index lost 2.07 points to 3,160.19 while the S&P 500 index slipped 1.31 points to 1,514.68.

The results came as financial markets remained worried about the recent Italian election, which failed to yield a clear winner, and the looming U.S. spending cuts totalling US$85 billion that are set to begin Friday.

The cuts could hit U.S. growth if no deal is reached to avoid it. Previous experience, however, suggests a last-minute deal will be cobbled together.

"You can only shock people so many times, things will probably get solved, it's in everybody’s best interests to solve these things," said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.

"It's more uncertain what will happen in Italy."

Meanwhile, TD Bank (TSX:TD), Royal Bank of Canada (TSX:RY) and CIBC (TSX:CIBC), all reported better than expected earnings for their first quarter.

Royal Bank and TD also increased their dividend.

"They're very resilient, they have an excellent business mix," Nakamoto said of the banks. "I think the growth rate will slow. There’s no doubt about that as the Canadian economy is slowing. But the Achilles heel for them in the past has been loan losses and they still seem quite contained."

Royal Bank shares closed up 54 cents at $64.02, while TD gained 56 cents to end at $84.85. CIBC lost 74 cents to close at $83.14.

The tech sector led advancers in Toronto, with BlackBerry (TSX:BB) ahead 40 cents to $13.98.

Strength also came from the industrials sector as Canadian National Railways (TSX:CNR) ran ahead $2.98 to $104.66 after earlier hitting a 52-week high of $104.89.

The energy sector was ahead per cent with the April crude contract on the New York Mercantile Exchange down 71 cents to US$92.05. Cenovus Energy (TSX:CVE) rose 61 cents to C$33.39.

April bullion moved down $17.60 to US$1,578.10 an ounce and Iamgold (TSX:IMG) declined 32 cents to C$6.95.

The base metals sector was down per cent while May copper was down two cents at US$3.55 a pound.

In other earnings news, bakery and grocery company George Weston (TSX:WN) saw its profits fall 40 per cent in the fourth quarter to $65 million or 43 cents per share. However, excluding one-time items, the company earned $1.02 per share compared with $1.01 in the same period in 2011 and its shares rose 92 cents to $74.55.

Valeant Pharmaceuticals International (TSX:VRX) posted a quarterly net loss $89.1 million or 29 cents per diluted share in the latest period. Adjusting for one-time items, it earned $1.22 per share, two cents below analyst forecasts. Its shares gained $1.30 cents to $69.55.

In New York, shares in Groupon, the coupons website, plunged 24.2 per cent to US$4.53 after reporting late Wednesday that its quarterly loss had grown.

The company replaced CEO Andrew Mason on Thursday and appointed executive chairman Eric Lefkofsky and vice-chairman Ted Leonsis to the Office of the Chief Executive while a replacement is sought.