Canadian stocks edged between small gains and losses Friday, as investors weighed strong bank earnings against an unexpected rise in the Canadian unemployment rate.
The S&P TSX Composite ended the day down 38.20 points to end the week at 12,075.09
The Canadian dollar settled back 0.44 cents to 98.19 U.S. cents
Financial stocks were mixed across the board, despite a slew of big Canadian banks reporting better-than-expected quarterly results this week. Shares of the Royal Bank of Canada picked up 3.6% to $48.70 after Canada’s largest lender posted a 43% rise in fourth-quarter profits from a year ago, topping analysts’ targets.
Bank of Nova Scotia also reported an 11% year-over-year rise in fourth-quarter earnings, but its shares still fell 2.4% to $49.03.
Rates strategists at Bank of America Merrill Lynch noted that, "The perception of the Canadian banking system as an anchor in the midst of global turbulence is perhaps an overstatement."
Merrill spokespeople added that Canada’s banks are exposed to domestic risks, including high levels of household debt and housing market pressures.
Gold-mining stocks fell for a second day after a three-session rally earlier this week. Shares of Barrick Gold Corp. lost 2.9% to $51.96 and rival Goldcorp Inc. lost 3.8% to $52.28.
Lifting the mining sector, shares of Teck Resources Ltd. logged its fifth straight day of gains, up 0.8% to $37.94. Teck shares picked up 15% in the previous four sessions.
Among notable decliners, Toronto-listed shares of Research In Motion Ltd. dropped 9.5% to $17.02 after the BlackBerry smartphone maker warned it would fall short of its earnings targets for the year.
Fertilizer stocks also retreated, with shares of Agrium Inc. down 2.4% to $69.90
On Friday, German Chancellor Angela Merkel warned that Europe’s problems will take years to fix but appealed for quick action among policy makers to help integrate the region’s economies. Her remarks followed a stern warning from French leader Nicolas Sarkozy on Thursday, when he warned that without economic convergence, the "euro-zone will explode."
On the economic front, Statistics Canada came out with figures this morning saying the country lost 18,600 jobs last month, with the unemployment rate hiking one-10th of a point to 7.4%.
The loss of 53,300 part-time jobs was partially offset by a gain of 34,600 in full-time employment. Despite recent declines, employment in Canada rose 1.2% compared to November 2010.
ON BAYSTREET
The TSX Venture Exchange grew 8.74 points to 1,556.88, while the Nasdaq Canada index subsided 15.78 points to 400.09
Nine of the 14 Toronto subgroups were negative on the day. Information technology and gold each lost 2.6%, while materials slid 2.4%.
The four gainers were led by industrials, up 1.2%, financials, ahead 0.7%, and energy, up 0.3%. Global base metal issues were unchanged on the day.
ON WALLSTREET
In New York, stocks shaved Friday morning's big job-related gains as concerns about Europe's debt crisis took over in the afternoon.
The Dow Jones Industrials finished in the red by 0.61 points to 12,019.40
The S&P 500 erased 0.30 points, to 1,244.28, while the Nasdaq Composite inched up 0.73 points to 2,626.93
Earlier, all three major indices had been up more than 1%. Two days into December, the Dow is up 4% this year to date, while the S&P and Nasdaq remain in the red by a handful of points.
Still, on the week, the Dow rallied about 7%, its biggest weekly gain since July 2009. The S&P 500 and Nasdaq have surged almost 8%, the best weekly performance since March 2009.
Bank stocks were among the top gainers Friday, with Bank of America and JPMorgan Chase leading the Dow's advance. Morgan Stanley, Goldman Sachs and Citigroup shares were also sharply higher.
The euro initially gained ground and euro-zone bond yields eased on the news, but later reversed course amid several troubling rumors.
Talk of a downgrade on Spain's credit rating spooked investors, pushing the Spanish 10-year yield up to 5.7%. Earlier in the day, it had slipped below 5.5%.
Also, ongoing chatter about the European Central Bank possibly lending hundreds of billions of dollars to the International Monetary Fund to aid Europe's debt-laden countries, led to reports that U.S. Republicans would try to block any such move. And that further worried investors.
Conservative lawmakers are against the IMF's involvement because it could leave U.S. taxpayers on the hook with a hefty bill.
Developments out of Europe will be the main driver for the stock market's moves as the year comes to a close, said some experts. If European officials can remain on the path toward a solution, stocks will likely end 2011 with modest gains. But roadblocks along the way will pressure the markets.
Western Digital's stock jumped 7% after the company raised its revenue guidance for the fourth quarter. The company had restarted production at its flood-damaged facilities in Thailand ahead of schedule.
Shares of Research in Motion slid nearly 10% after the company said it no longer expects to meet its full-year earnings target.
Shares of Big Lots fell more than 7% after the retailer posted a sharp decline in third-quarter profit.
Economically speaking, U.S. government said employers boosted payrolls by 120,000 jobs in November, from an upwardly revised 100,000 jobs in October. The unemployment rate eased to 8.6%, the lowest level since March 2009.
A survey of 21 economists had predicted that 110,000 jobs were added in November, while the unemployment rate was expected to stay unchanged at 9%.
The price on the benchmark 10-year U.S. Treasury gained lost ground, pushing the yield down to 2.04% from 2.07% late Thursday. Treasury prices and yields move in opposite directions.
Oil for January delivery upped 86 cents $100.98 U.S. a barrel.
Gold futures for February delivery gained $11.70 to settle at $1,747 U.S. an ounce.
