Toronto stock market slightly lower as indexes south of the border rally

TORONTO – Gold and materials stocks pushed the Toronto stock market to a slightly lower close Friday, in spite of fresh data showing that the Canadian economy fared better than expected in July.

Statistics Canada said the economy expanded 0.5 per cent in July as oilsands production came back onboard following a disruption stemming from wildfires that forced the evacuation of Fort McMurray, Alta.

The loonie added 0.19 of a cent to 76.24 cents US.

“The bank of Canada had been talking down July GDP but the numbers have come in to be not as bad as feared, so that’s helped to shore up support for the Canadian dollar,” said Colin Cieszynski, chief marketing strategist at CMC Markets Canada.

Meanwhile, the S&P/TSX composite index gave back 28.57 points to 14,725.98, dragged lower by materials stocks, which lost 1.39 per cent, and the gold sector, which was down 1.26 per cent.

Oil prices rose, with the November crude contract up 41 cents to US$48.24 a barrel.

“It’s continuing the trend seen throughout the week where oil has been getting boosted by improving U.S. inventories and the potential for an OPEC production deal in November,” Cieszynski said.

Crude oil has been rallying this week after the Organization of the Petroleum Exporting Countries surprised investors by announcing they had reached a deal on a small cut to production.

In New York, stock markets rallied as investors renewed their hopes that Deutsche Bank and the broader financial system are in better shape than previously believed.

The U.S. Department of Justice wants the German lender to pay $14 billion to settle an investigation into mortgage-backed securities.

Investors had been worried that problems at the bank — one of the largest in Europe — could ripple through the entire financial system.

But a report that said the bank could use a smaller payment to settle the case allayed some of those fears and caused financial stocks in the U.S. and in Europe to climb higher.

“That’s reduced fears that there could be some kind of a banking crisis,” Cieszynski said.

The Dow Jones industrial average shot up 164.70 points to 18,308.15, the Nasdaq composite gained 42.85 points to 5,312.00, and the S&P 500 increased by 17.14 points to 2,168.27.

In other commodity news, December gold contracts were down $8.90 at US$1,317.10 per ounce, November natural gas contracts were down five cents to US$2.91 per mmBTUm, and December copper was up two cents to US$2.21 a pound.

—With files from The Associated Press

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Note to readers: This is a corrected story. A previous version had an incorrect figure for the Canadian dollar.