TSX little changed on weak metals stocks as RBC writes down $855M;NY higher

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(The Canadian Press)

By Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock marker failed Wednesday to make a convincing breakout to fresh record territory as early triple-digit gains melted away in the face of rising losses in base and precious metal stocks.

Financials provided support to the index after Royal Bank (TSX: RY.TO) announced a big writedown which was smaller than investors had expected. New York markets also closed off the highs of the session as investors welcomed data showing U.S. inflation pressures eased in April despite the biggest jump in food prices in 18 years.

Toronto's S&P/TSX composite index added 9.61 points to 14,626.31.

Royal Bank shares traded up $1.23 to $49.85 after the bank announced it is writing down $855 million because of "market conditions." The writedowns will be worth $420 million after tax, Canada's largest bank said.

Overall, the financial sector finished off earlier highs, but still up one per cent as Scotiabank (TSX: BNS.TO) rose 54 cents to $48.75.

The TSX has had difficulty exploiting a strong gain Monday that saw the TSX break through its old record close from July of last year of 14,625.76.

But analysts pointed the TSX is still up almost six per cent year to date.

"You go back to Jan. 22, 23 - that was a significant climax selloff and bullish reversal after an absolutely disastrous selloff through January," said Paul Thornton of Northern Securities in Toronto.

"I'm seeing some buying in increasing number of stocks for about two weeks now that is absolutely enormous and is clearly a sign that the big boys out there, being mutual funds and pension funds, are going, 'You know what, we have to get in, we're going to load up."'

U.S. indexes haven't fared nearly as well - the Dow industrials are still down over two per cent year to date while the Nasdaq composite is down around five per cent.

The TSX Venture Exchange was up 11.73 points to 2,567.68 while the Canadian dollar moved down 0.15 cent to 99.57 cents US.

The Dow Jones industrials moved up 66.2 points to 12,898.38 as the U.S. Labour Department reported that consumer prices edged up 0.2 per cent last month, compared to a 0.3 per cent rise in March. Food costs surged 0.9 per cent during the month.

"The Fed has signalled that it wants to take more of a wait-and-see approach to policy given the substantial moves enacted to combat liquidity issues and downside risks to the growth outlook," said RBC economist Rishi Sondhi.

"Today's weaker-than-anticipated inflation data supports the case for the Fed to remain on the sidelines for now as they assess the impacts of their actions."

The Nasdaq composite index gained 1.58 points to 2,496.7 and the S&P 500 index climbed 5.62 points to 1,408.66.

Investors took in more dismal data from the U.S. housing sector. RealtyTrac Inc. said the number of American homes facing foreclosure up 65 per cent over a year ago.

Meanwhile, U.S. mortgage finance company Freddie Mac's first-quarter loss widened to US$151 million as the housing market worsened. The second-largest buyer and backer of American home loans also said it plans to raise US$5.5 billion in new capital.

The energy sector was off 0.12 per cent as the June crude contract on the New York Mercantile Exchange was $1.58 lower to US$124.22 a barrel even as the U.S. Department of Energy said that crude inventories rose by 200,000 barrels last week, much less than the expected 2.5 million barrel jump analysts had expected. But gasoline supplies fell by a bigger than anticipated 1.7 million barrels last week.

Petro-Canada (TSX: PCA.TO) moved up 36 cents to $56.26 while Suncor Energy (TSX: SU.TO) eased 40 cents to $63.37.

Bankers Petroleum Ltd. (TSX: BNK.TO) is splitting in two - one company focusing on heavy oil in Albania and the other on North American shale gas. Its shares rose 10 cents to $2.

The industrials sector also provided a boost with Canadian National Railway (TSX: CNR.TO) gained $1.03 to $55.77 and Bombardier Inc. (TSX: BBD-B.TO) climbed 20 cents to $6.67

The TSX base-metals sector was down 1.2 per cent as Inmet Mining Corp. (TSX: IMN.TO) saw its shares dive $9.49 to $67.50 after it disclosed that its Las Cruces copper project in Spain will not start direct ore shipping in June as previously forecast because a Spanish water authority has suspended authorization for the dewatering and re-injection system.

But Teck Cominco Ltd. (TSX: TCK-B.TO) shares improved by 70 cents to $49.35

The gold sector was off 1.75 per cent as the June bullion contract in New York faded $3.10 to US$866.50 an ounce. Barrick Gold Corp. (TSX: ABX.TO) gave back 81 cents to $37.96.

The tech sector also depressed the TSX late in the session as Research In Motion (TSX: RIM.TO) shed early gains to lose $1.61 to $139.39.

CAE Inc. (TSX: CAE.TO) reported a 20 per cent rise in full-year net profit to $152.7 million as revenue advanced 14 per cent to $1.42 billion. Earnings in the flight simulator company's fourth quarter ended March 31 climbed to $35.6 million, compared with $34.3 million a year earlier and its shares rose three cents to $13.12.

Cardiome Pharma Corp. (TSX: COM.TO) shares were 37 cents lower to $9.30 after its first-quarter loss widened to $22.2 million due to higher research and development costs. The Vancouver-based cardiovascular drug developer's loss compared to a loss of $14 million for the same quarter last year.

ING Canada Inc. (TSX: IIC.TO) reported a sharp drop in first-quarter net income to $23 million, compared with $126.2 million a year earlier, blaming turbulent weather and stock markets. Its shares fell $1.30 to $40.11.

On the TSX, declines beat advances 817 to 776 with 248 unchanged as 394.4 million shares traded worth $7.3 billion.