CANADA STOCKS-Banks unable to keep TSX from lower close

Tue Aug 28, 2012 5:01pm EDT

* TSX ends down 38.92 points, or 0.32 percent, at 12,009.90
    * BMO results lift banking sector, Scotiabank ends flat
    * Energy and mining stocks weigh after recent rally

    By Alastair Sharp
    TORONTO, Aug 28 (Reuters) - Despite a rise in financial
shares spurred by solid quarterly results and a dividend
increase from Bank of Montreal, Canadian stocks slipped on
Tuesday as a recent market rally showed signs of fatigue.
    The financial group was the only one of the 10 main sectors
on the Toronto exchange's benchmark index to rise. Energy and
materials stocks weighed heavily.
    The market has been rallying on hopes for stimulus measures
from the U.S. Federal Reserve, the European Central Bank and
other central banks.
     That rally was "in advance of the Fed and on the back of
expected bond purchases from the ECB and helped by the recent
rally in commodity markets, but the market is consolidating
those gains now," said Fergal Smith, managing market strategist
at Action Economics.
    Shares in Bank of Montreal ended 0.4 percent higher
at C$57.93 after the lender reported a 37 percent jump in
quarterly profit, topping expectations, and raised its quarterly
dividend for the first time in five years. 
    Three of Canada's five main banks featured among the top
five positive influences on the index. Leading the charge were
Royal Bank of Canada and Toronto Dominion Bank 
which, along with Canadian Imperial Bank of Commerce,
report quarterly earnings on Wednesday.
    Bank of Nova Scotia gained early in the session but
ended flat at C$52.90 after it said the sale of its corporate
headquarters in Toronto helped it post a 57 percent rise in
third-quarter profit. It also raised its dividend.
    "Banks are living up to their reputation of regular dividend
increases and sharing the wealth with their shareholders," said
Fred Ketchen, director of equity trading at ScotiaMcLeod.
    Insurers Manulife Financial Corp and Sun Life
Financial Inc also figured among the risers. 
    Other sectors, notably the heavyweight energy group, were
trading lower as investors worried about a slowdown in the
global economy.
    Pipeline operator Enbridge Inc fell 1.4 percent to
C$38.69, for its second straight down day, as oil and gas
producers cut flows due to Hurricane Isaac, which threatens the
U.S. Gulf Coast. 
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 38.92 points, or 0.32 percent, at
12,009.90.
    Action Economics' Smith said that after the index notched
rises for most of August, investors are waiting to see what
comes out of a meeting of central bankers in Jackson Hole,
Wyoming, later this week, and are also eyeing a German
constitutional court ruling on Sept. 12 on the euro zone's
permanent bailout fund. 
    Any signs from Jackson Hole of an easing monetary policy in
big economies could push Toronto's resource-rich index higher as
stimulative measures would likely boost demand for a slew of
metals and other commodities.
    "They're still looking for new stimulus to come in various
places in the world. If that happens, particularly the effect
from China would be growing demand for copper," ScotiaMcLeod's
Ketchen said.