Financials send TSX higher as RBC takes $855 writedown; NY up

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(The Canadian Press)

By The Canadian Press

TORONTO - The financial sector powered the Toronto stock market to a gain of around 100 points late Wednesday morning as investors breathed a sigh of relief after Royal Bank (TSX: RY.TO) announced a big writedown which was nonetheless smaller than investors had expected.

New York markets were also positive after U.S. inflation pressures eased in April despite the biggest jump in food prices in 18 years.

Toronto's S&P/TSX composite index advanced 103.10 points to 14,719.8.

Royal 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. Its shares ran ahead $1.11 to $49.73.

Overall, the financial sector was up 1.2 per cent as Scotiabank (TSX: BNS.TO) rose 64 cents to $48.85.

The TSX Venture Exchange was up 11.13 points to 2,567.08 while the Canadian dollar moved up 0.08 to 99.64 cents US.

The Dow Jones industrials moved up 97.14 points to 12,929.32 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 22.61 points to 2,517.73 and the S&P 500 index climbed 10.68 points to 1,413.72.

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 up 0.37 per cent as oil prices dipped after rising sharply Tuesday on reports that Iran was considering cutting oil production. The June crude contract on the New York Mercantile Exchange was $1.54 lower to US$122.69 a barrel. Petro-Canada (TSX: PCA.TO) moved up 65 cents to $56.55.

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 17 cents to $2.07.

The industrials sector also provided a boost with Canadian National Railway (TSX: CNR.TO) gained $1.09 to $55.83 and Bombardier Inc. (TSX: BBD-B.TO) climbed 15 cents to $6.62.

The TSX base-metals sector was lower as Inmet Mining Corp. (TSX: IMN.TO) saw its shares dive $7.99 to $69 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.

The gold sector was flat as the June bullion contract in New York faded 80 cents to US$884.10 an ounce. Iamgold (TSX: IMG.TO) rose eight cents to $6.18.

Support also came from two market heavyweights: Research In Motion (TSX: RIM.TO) moved ahead $2.58 to $143.58 and Potash Corp. (TSX: POT.TO) improved $5.22 to $203.21.

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 10 cents to $13.19.

Cardiome Pharma Corp. (TSX: COM.TO) shares were 50 cents lower to $9.17 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 $1.02 to $40.39.

Overseas, Japan's Nikkei average advanced 1.2 per cent, closing up by 164.82 points at 14,118.55, while the Hong Kong Hang Seng slipped 19.29 points to 25,533.48.

The FTSE 100 index was up 19.9 points to 6,231.8 in London, while the German DAX added 24.15 points to 7,084.34 and the Paris CAC 40 was 51.79 points higher to 5,050.46.