The Toronto stock market moved slightly higher Wednesday afternoon with investors expecting the European Union to deal with a debt crisis enveloping some of its member countries.
The S&P/TSX Composite Index recovered 12.09 points by the end of the day to 11,286.33.
Gains were led by financial stocks on the belief that the European Union would move to help Greece with its mounting debt problem. But there were also mixed signals about the outcome of a Thursday meeting between E.U. leaders and European Central Bank president Jean-Claude Trichet.
But German officials said Wednesday there was no urgent need for a bailout at the moment and that "no decision on such help" is imminent. They also said E.U. rules prohibited them from guaranteeing another country’s debts.
Markets have dropped in recent weeks over concerns that debt problems in countries like Greece, Spain and Portugal would spread and endanger a global economic recovery.
One source close to the talks added that the E.U. needs to come up with a collective solution and not just one that deals with the immediate problem posed by Greece.
On the TSX, the financials sector gained, as Manulife Financial gained 26 cents to $19.50 while Royal Bank was ahead 94 cents to $54.75.
Industrial stocks were up as transport giant Bombardier Inc. rose three cents to $5.40.
The energy sector declined even as oil prices advanced despite a report showing unexpected growth in U.S. crude inventories. The American Petroleum Institute said U.S. crude stocks jumped 7.2 million barrels last week. Analysts had expected an increase of two million barrels.
Among energy issues, Suncor Energy was down 66 cents to $31.19.
Talisman Energy Inc. shares declined 33 cents to $17.67 after the company said it had a $111-million net loss in the fourth quarter, a stark contrast to the $1.2-billion net profit in the final quarter of 2008. Revenue rose to $1.82 billion from $1.77 billion in the year-ago quarter.
The gold sector was down as Barrick Gold Corp. fell 54 cents to $37.81.
March copper was unchanged at $2.99 U.S. a pound and the base metals sector lost territory. Inmet Mining was down $1.36 to $55.64.
In other corporate news, the operator of Canada’s largest securities markets, TMX Group Inc., said it had a $26.8-million net loss in the fourth quarter. TMX shares rose 70 cents to $29.21.
Air Canada is reporting that it had a $56-million net loss in the fourth quarter, a dramatic improvement from the net loss of $727 million racked up in the same period of 2008. Much of that loss was due to foreign exchange losses. Air Canada’s operating revenues dropped by $150 million to $2.35 billion, but its shares gained nine cents to $1.41.
MDS Inc. said it has agreed to sell some of its last remaining non-core businesses but that a Montreal unit would be closed and 225 jobs in that city cut. The Canadian life sciences company will get $45 million in cash and notes for selling parts of its MDS Pharma Services early stage business. MDS shares were up seven cents to $8.51.
In economic news, Statistics Canada said today that the country's exports and imports both advanced in December, resulting Canada's trade deficit with the world to widen to $246 million from $201 million in November.
The Canadian dollar vaulted 0.53 cents to 94.10 cents U.S.
ON BAYSTREET
Of the 14 TSX subgroups, eight remained negative in the afternoon, weighed down by global base metals, off 1.9%, while gold lost 1.3%, and metals and mining stocks slid 1.2%.
Of the half-dozen gainers, financials and health-care were co-winners, up 1.2% each, while telecoms moved 0.7% higher.
The TSX Venture Exchange recovered 2.05 points to 1,476.58, while the Nasdaq Canada index moved ahead 6.63 points to 721.19.
ON WALLSTREET
In New York, stocks struggled Wednesday as investors weighed Greece's debt crisis, a stronger dollar and Ben Bernanke's outline of how the Fed plans to withdraw trillions of dollars of stimulus from the financial system.
The Dow Jones industrial average was off its lows of the day, but still trailed Tuesday’s close by 20.26 points by the final bell, to 10,038.38. The S&P 500 index skidded 2.39 points to 1,068.13 and the Nasdaq composite fell three points to 2,147.87.
Stocks rallied Tuesday as growing bets that the European Union will rescue Greece from its debt problems reassured investors after a four-week selloff. But stocks were choppy Wednesday on concerns that Greece is just the first of many countries that is feeling the pressure of a growing deficit.
Reports late Wednesday said France and Germany may present a rescue plan for Greece at Thursday's meeting of euro zone countries. Meanwhile, Greece has vowed to press forward with cutbacks, despite an ongoing worker strike.
Ben Bernanke's comments on the Fed's plans to wind down its extraordinary stimulus measures and the strengthening of the dollar versus the euro were also in play.
Bank shares bounced after several down sessions, tempering some of the broader weakness in the market. The KBW Bank index gained 1.2%.
The Federal Reserve Chairman said that while the U.S. economy continues to require the support of emergency programs the Fed enacted at the height of the financial crisis, "at some point the Federal Reserve will need to tighten financial conditions."
He said that the Fed will pull cash from the system before it lifts interest rates and that its decision to boost the emergency "discount" rate is not the same as a shift in policy. The prepared testimony was meant to be delivered at a House Financial Services Committee hearing that was postponed due to snow.
Although Greece's impact is small, the threat of a default there has intensified worries about other debt-challenged European countries, including Spain, Portugal, Ireland and Italy. A crisis overseas would set back the still-fragile global economic recovery and hurt U.S. financial institutions. Investors are also keeping an eye on the growing U.S. budget deficit.
The debt crisis has sparked something of a flight from risk over the last few weeks, with investors choosing government bonds and the dollar over stocks. Investors have fled the euro in favor of the greenback and have sold dollar-traded commodities, commodity stocks and a broad swath of securities in other sectors.
The Dow, S&P 500 and Nasdaq have all declined the past four weeks, despite improved quarterly earnings and revenues and some positive signs in the economic reports.
Despite Tuesday's rally, the market is likely to stay a "choppy mess" for a while, one expert said.
Walt Disney reported higher-than-expected quarterly earnings and revenue in a report released after the close of trading Tuesday. Disney shares fell 1%.
Economically, the U.S. trade deficit grew to $40.2 billion in December from a revised $36.4 billion U.S. in November, a government report said.
The January Treasury budget is on tap later in the day.
Treasury prices fell, raising the yield on the 10-year note to 3.64% from 3.63% late Tuesday. Treasury prices and yields move in opposite directions.
The price of a barrel of oil stepped ahead 74 cents to $74.49 U.S.
Gold prices subtracted one dollar to $1,076 U.S.
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