The Toronto stock market was lower Thursday afternoon as investors consolidated three days of sharp gains netted on relief that the European Union is making serious moves to staunch a government debt crisis.
The S&P/TSX composite index skidded 79.38 points to end the day at 12,116.59.
The Toronto market is still up almost four per cent so far this week following last weekend’s massive $1-trillion U.S. financial rescue package from the European Union, which is designed to contain the debt crisis.
Financials led the TSX losses amid a report that New York’s attorney general has launched an investigation into eight banks to determine whether they misled ratings agencies about mortgage securities. A source said that Attorney General Andrew Cuomo is trying to figure out if banks provided the agencies with false information in order to get better ratings on the risky securities.
Royal Bank was down 49 cents to $60.64.
Sun Life Financial Inc. shares were down 25 cents to $30.71 after it said Thursday it’s setting up a stand-alone mutual fund company. Canada’s third-largest life insurance company said it will bring a series of new funds to Canada to expand its wealth management services in the country.
Its shares eased five cents to $30.91.
The TSX Global Gold Index dipped, as Kinross Gold was down 37 cents to $19.29 while Goldcorp Inc. declined 68 cents to $46.47.
The energy sector shed strength, as Canadian Natural Resources backed away $1.07 to $72.73 while Canadian Oil Sands Trust was down 42 cents to $28.83.
There was some major dealmaking in the Canadian oilpatch.
Penn West Energy Trust has entered into an agreement with a wholly-owned subsidiary of the China Investment Corp. to form a joint venture to develop the Canadian company’s bitumen assets located in the Peace River area of northern Alberta.
CIC has also agreed to purchase 23.5 million units for about $435 million. In TSX trading Thursday, the units were up 74 cents to $20.19.
The base metals sector was ahead as July copper gained five cents at $3.24 U.S. a pound. First Quantum Minerals lost $2.33 to $71.27 while FNX Mining improved 65 cents to $12.65. The company reported a quarterly profit of $1.9-million, bouncing back from a loss a year earlier when it booked a writedown related to its investment in Gold Wheaton Gold Corp.
Telecoms were also supportive after Industry Minister Tony Clement told a House committee that the Harper government is committed to preserving Canadian content on television and radio while allowing for a greater foreign presence in the telecommunications sector.
Rogers Communications gained 72 cents to $36.93 while BCE Inc. improved by 32 cents to $31.46.
In Canada, Canadian Tire Corp. Ltd. shares rose $2.61 to $59.11 after the retailer reported quarterly net income of $49.4 million or 61 cents per share, down slightly from a year earlier.
Revenue was up a bit from a year ago to $1.83 billion.
Shares in Tim Hortons Inc. gained $1.13 to $35.48 after it said its net income was $78.9 million or 45 cents per share in the first quarter. Revenue rose 4.8% to $582.6 million as same-store sales rose 5.2% in Canada and 3% in the United States.
Clothing maker Gildan Activewear Inc. reported that it had $48.8 million U.S. or 40 cents U.S. per share of net income in its fiscal second quarter with $326.8 million U.S. in sales. It forecast full-year sales of $1.3 billion U.S. -- up 25% from 2009. Its shares were ahead $1.00 to $31.20.
Elsewhere, Honeywell International Inc. has a deal to take over Edmonton-based Matrikon Inc. in a $145-million transaction. Honeywell is offering $4.50 cash per Matrikon share. The Canadian maker of industrial monitoring devices brings expertise in the energy and mining sectors.
Matrikon shares jumped 54 cents to $4.49.
The Canadian dollar moved down 0.06 cents to 98.02 cents U.S.
ON BAYSTREET
Of the 14 TSX subgroups, eight were lower, weighed mostly by gold’s 1.7% downfall, materials’ 1.5% drop and a 0.7% slide by financials.
The half-dozen gainers were helped by telecoms, that group climbing 0.7%, consumer discretionaries’ 0.6%, and real-estate’s 0.3% jump.
The TSX Venture Exchange tailed off 16.02 points to 1,609.71, while the Nasdaq Canada index moved 15.84 points lower to 747.28
ON WALLSTREET
In New York, stocks slumped Thursday, with the Dow pointed downward, with investors stepping back after propelling markets 5% higher in just three days.
The Dow Jones industrial average gave back 113.96 points, or 1.1%, to close at 10,782.95
The S&P 500 index tapered off 14.23 points to 1,157.44. The Nasdaq composite index fell 30.66 points to 2,394.36.
The dollar strengthened versus the euro, dragging down dollar-traded oil, gold prices and stocks.
Stocks rallied Monday and Wednesday as investors moved away from worries about Europe's debt crisis spreading and instead opted to scoop up issues hit in last week's massive selloff.
Tuesday brought some selling, but it wasn't enough to take away from the week's gains.
After such an advance, stocks were adrift through most of Thursday, before turning lower near the close.
One expert said that by default this struggle has brought some money into stocks, which at least offer better returns that low-yielding bonds. However, trading volume hasn't been as strong as it was during last week's shakeout, with investors still wary.
Last week, the three indexes lost more than 5% in three trading sessions, including Thursday, when the "flash crash" sent the Dow down by as much as 1,000 points before it recovered. Fears about the European debt crisis spreading were tempered Monday after European leaders announced an almost $1-trillion U.S. bailout. But the concerns about Europe linger.
Reports Thursday said some of the financial industry's leading corporations are facing investigations at both the federal and state level, as inquiries into the events that contributed to the crisis accelerate.
The Wall Street Journal cited a source that said the Securities and Exchange Commission has sent civil subpoenas to JPMorgan Chase, Citigroup, Deutsche Bank and UBS
New York Attorney General Andrew Cuomo's office confirmed reports that it is investigating whether many of the same firms provided misleading information to credit rating agencies.
In addition to UBS and Deutsche Bank, Cuomo is looking at Goldman Sachs, Morgan Stanley, Credit Suisse, Citigroup, Credit Agricole and Merrill Lynch, which has since been bought by Bank of America.
Bank stocks as a whole were modestly lower, with the KBW Bank index off 0.3%.
Apple and online auctioneer eBay both gained after reportedly receiving upgrades from Morgan Stanley.
But Cisco Systems shares fell 4% even after the company reported higher sales and earnings that beat estimates during what its chief executive called the company's "best quarter" ever.
The weekly jobless claims report from the Department of Labor, released before the start of trade Thursday, showed 444,000 initial jobless claims were filed in the week ended May 8. That was down 4,000 from a downwardly revised 448,000 the previous week, and the lowest level since March 27.
It was the fourth consecutive week of declining claims, but the improvement hasn't been sufficient to drive real job growth.
Continuing claims, a measure of Americans who have been receiving benefits for a week or more, rose to 4,627,000 from 4,615,000 the previous week. Economists expected 4,570,000 on average.
Treasury prices improved, lowering the yield on the 10-year note to 3.56% from Wednesday’s 3.57%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil eased $1.73 to $73.92 U.S.
Gold prices fell nine dollars to $1,234 U.S. an ounce
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