TORONTO – The Toronto stock market closed flat as a third day of bargain hunting fizzled, trumped by uncertainty about the future of the eurozone.
Commodity prices rose even as European Union leaders ended their one-day summit no closer to finding a solution to the region’s worsening government debt crisis.
The S&P/TSX composite index had risen as much as 63 points as investors continued to buy up stocks beaten down in a sharp sell-off over the past three weeks. But the TSX ended the day up 1.27 points to 11,566.07 led by falling bank and resource stocks.
The TSX racked up strong, triple-digit gains over the previous two sessions as some investors thought the market was looking oversold after plunging as much as 1,000 points from the beginning of this month.
“You get to oversold conditions where stocks are cheap and maybe we’ve had a bit too much of this selling,” said John Stephenson, portfolio manager at First Asset Funds Inc.
“But I’ll tell you, there is no conviction out there, the news continues to deteriorate out of Europe so it’s hard to be wildly bullish in this market.”
The TSX Venture Exchange climbed 25.99 points to 1,282.47.
The Canadian dollar was down 0.28 of a cent at 97.36 cents US.
U.S. markets were mixed as data showed orders for durable goods increased a slight 0.2 per cent last month after a 3.7 per cent decline in March. That was below the 0.5 per cent rise economists had expected.
The Dow Jones industrials were ahead 33.6 points to 12,529.75.
The Nasdaq composite index declined 10.74 points to 2,839.38 while the S&P 500 index rose 1.82 points to 1,320.68.
Leaders of the 27-member European Union ended their one-day meeting Wednesday apparently no closer to fixing the financial crisis or determining how to deal with the growing possibility that Greece could be forced to exit the eurozone monetary union.
Markets have been under selling pressure this month on worries that Greece could be forced to leave the eurozone, particularly if parties opposed to further austerity measures gather more support in next month’s election.
“Unfortunately, Europe is running out of time . . they don’t have the options they did and these guys are in a tough place,” added Stephenson.
But political uncertainty in Greece is just one of the fires that Europe needs to put out. Leaders are also worried about rising borrowing costs in Spain and Italy that could force them to seek bailouts as did Greece, Portugal and Ireland.
The financial sector lost 0.73 per cent on the latest round of worry over the consequences of a messy Greek exit from the eurozone and mixed earnings reports from two of the big Canadian banks.
TD Bank Group (TSX:TD) reported a profit of $1.69-billion or $1.78 a share before adjustments, up 21 per cent from a year ago, largely driven by the bank’s North American retail business.
After adjustments, the bank’s net income was $1.73 billion or $1.82 a share, four cents above estimates and its shares gained 26 cents to $78.99.
Royal Bank of Canada (TSX:RY) said its second-quarter profit from continuing operations was $1.56 billion or $1.01 a share, but would have been higher without a loss associated with its acquisition of the remaining half of RBC Dexia.
Excluding certain items, Royal Bank earned $1.17 a share, a penny short of expectations and its stock gave back $1.52 to $51.38.
Commodity prices advanced even as HSBC Corp. said Thursday that its Purchasing Managers Index based on a survey of Chinese manufacturers showed activity weakened further in May.
A preliminary PMI, based on responses by 85 to 90 per cent of companies surveyed for the full index which is released later, fell to 48.7 from April’s 49.3 on a 100-point scale. Numbers below 50 indicate a contraction.
There were also mounting signs of a deep recession in the eurozone, where the monthly purchasing managers index from Markit, a gauge of business activity, fell to 45.9 in May from 46.7 in April. The fall was bigger than the expected decline to 46.5. Anything below 50 indicates a contraction.
The base metals component was down 0.33 per cent as the July copper contract on the Nymex rose three cents to US$3.43 a pound. Teck Resources (TSX:TCK.B) shed 30 cents to C$31.16.
The energy sector was slightly lower as the July crude contract on the New York Mercantile Exchange gained 76 cents to US$90.66 a barrel after closing below $90 Wednesday for the first time since the end of October. Canadian Natural Resources (TSX:CNQ) dipped four cents to C$31.41.
The tech sector also weighed, with Research In Motion Ltd. (TSX:RIM) down 39 cents to $10.98, its lowest level since late 2003. The stock slid after the BlackBerry maker said Wednesday that Patrick Spence, head of global sales, had resigned.
The gold sector rose about 0.5 per cent as the June bullion contract in New York gained $9.10 to US$1,568.40 an ounce. Iamgold Corp. (TSX:IMG) advanced 55 cents to C$11.
The industrials sector was up 0.55 per cent with Canadian Pacific (TSX:CP) shares up $2.26 to $77.25 as the railway entered a second day of a strike. Federal Labour Minister Lisa Raitt has said the government is prepared to introduce back-to-work legislation if CP and the Teamsters Canada Rail Conference can’t reach a deal.