TORONTO - The financial sector helped send the Toronto stock market lower Thursday after two of the big Canadian banks delivered quarterly results that narrowly missed analysts' forecasts.
The S&P/TSX composite index lost 64.25 points to 13,687.22 with buyers also disappointed by the latest reading on the American economy. The TSX Venture Exchange gained 3.67 points to 2,052.68.
Further signs of U.S. weakness helped send the Canadian dollar down 0.34 of a cent to 101.92 cents US.
Financials had a major impact on the market's decline, with the sector down 1.1 per cent as three of the big Canadian banks came out with earnings results Thursday morning.
TD Bank's (TSX:TD) profits grew to $1.33 billion in the second quarter from $1.18 billion. However, the results missed analyst expectations, with TD posting adjusted earnings per share of $1.59, missing forecasts by a penny. TD shares shed $1.95 to $83.34.
CIBC (TSX:CM) shares fell $3.14 to $81.31 as it reported net income of $678 million or $1.60 per share for the second quarter, compared with net earnings of $660 million or $1.59 a year ago. On an adjusted basis, the earnings were $1.75, about five cents below expectations.
"The theme we're seeing with those two is lower revenues, higher costs and that's definitely affecting their operating leverage and resulted in them missing the quarter," said Alison Mendes, portfolio manager at Manulife Asset Management.
National Bank of Canada (TSX:NA) reported second-quarter net income of $295 million or $1.48 per diluted share, compared with $261 million or $1.50 in the same 2010 period. The bank is also raising its common share dividend for the quarter ending July 31 to 71 cents from 66 cents but its shares fell 81 cents to $80.06 even as it beat earnings and revenue expectations.
The base metals sector was down 2.11 per cent as the July copper contract was off two cents at US$4.09. First Quantum (TSX:FM) gave back $3.91 to C$128.09.
Lundin Mining Corp. (TSX:LUN) shares tumbled $1.67 or 19.5 per cent to $6.89 after it said Wednesday that it will remain an independent company, after its board of directors and financial advisors wrapped up a strategic review without finding a compelling deal to pursue. The strategic review was launched after a proposed friendly tie-up with Inmet Mining Corp. (TSX:IMN) was abandoned in March.
The gold sector was down 0.66 per cent as bullion prices dipped after investors, nervous about the European government debt crisis, had pushed gold higher the previous four sessions. The June contract in New York was down $8.90 at US$1,517.80.
Barrick Gold Corp. (TSX:ABX) slipped 13 cents to C$45.99 while Kinross Gold Corp. (TSX:K) faded 11 cents to $14.88.
The energy sector was flat as oil prices declined after surging the previous session after data showed a much lower buildup of crude inventories in the U.S. last week. Still, the U.S. Energy Department said four-week average oil demand in the U.S. has dropped 5.3 per cent, while gasoline demand has fallen 2.1 per cent. The July crude contract on the Nymex lost $1.53 to US$100.63 a barrel.
Suncor Energy (TSX:SU) gained 18 cents to C$40.55 and Cenovus Energy (TSX:CVE) was up 31 cents at $35.33.
Oil prices were pressured downard by the latest look at the American economy which showed annualized first-quarter growth of 1.8 per cent, well below expectations that revised data would show growth of two per cent, largely on the back of stronger than anticipated recent retails sales data.
The consumer spending component was particularly disappointing, revised down from a 2.7 per cent gain to a 2.2 per cent gain.
Also, more people applied for unemployment benefits last week, a sign the American job market remains weak. Claims rose by 10,000 to 424,000.
"That is just reflecting that, certainly, the U.S. economy is growing less than forecast and that's reflecting smaller gains in consumer spending than previously anticipated," Mendes said.
"And the U.S. jobless claims unexpectedly trending higher is definitely telling you that the U.S. is taking its time emerging from the downturn."
Investors also took in another development in the battle for control of the operator of the Toronto Stock Exchange.
The Maple Group Acquisition Corp., a consortium of Canadian pension funds and banks, is taking its hostile $3.6-billion bid for TMX Group (TSX:X) directly to its shareholders. The move late Wednesday came after the stock exchange operator accelerated a shareholder vote on its favoured plan to merge with the London Stock Exchange. TMX shares gained 45 cents to $45.02.
New York markets were also lower as the Dow Jones industrial average lost 63.35 points to 12,331.31.
The Nasdaq composite index declined 0.22 of a point to 2,761.16 while the S&P 500 index slipped 4.83 points to 1,315.64.
Concerns about a slowing U.S. economy has been one of the two main factors behind the poor performance of stocks over the past few weeks, the other relating to concerns over Europe's debt crisis, in particular whether Greece will end up having to restructure its mountain of debts.
Some of those worries were eased Thursday by comments from Germany's finance minister, Wolfgang Schaeuble, that Greece may need more time to get its house in order -- an indication that Greece will get the next tranche of its rescue loans and possibly a second bailout.
In other earnings news, media company Quebecor Inc. (TSX:QBR.B) said first-quarter profits slipped to $34.3 million, as its revenues grew 4.5 per cent. On an adjusted basis, earnings were 56 cents per share, two cents below expectations and its shares gained $1.23 cents to $34.28.
Earlier in Asia, Japan's Nikkei 225 stock average closed 1.5 per cent higher, South Korea's Kospi leaped 2.8 per cent while Australia's S&P/ASX 200 rose 1.6 per cent.
Hong Kong's Hang Seng ended 0.7 per cent higher.
European markets were mixed with London's FTSE 100 index ahead 0.19 per cent, Frankfurt's DAX slipped 0.95 per cent and the Paris CAC 40 was off 0.57 per cent.
