CANADA STOCKS-RBC, TD earnings help drive TSX higher; golds slip

Thu Feb 28, 2013 5:20pm EST

* TSX up 89.44 points, or 0.70 percent, at 12,821.83
    * Eight of 10 main index sectors advance
    * RBC gains 0.9 percent after results
    * Gold miners follow bullion prices lower

    By John Tilak and Alastair Sharp
    TORONTO, Feb 28 (Reuters) - Forecast-topping quarterly
results from Royal Bank of Canada and Toronto-Dominion
Bank, the country's two biggest banks, helped drive
Canada's main stock index higher on Thursday, overcoming
weakness in gold miners.
    The market was also supported by positive economic data from
the United States, Canada's biggest trade partner, which spurred
gains in oil and gas and industrial shares.
    Royal Bank rose 0.9 percent to C$64.02 after it reported a
12 percent rise in quarterly profit on the back of stronger loan
growth and capital markets income, prompting the bank to raise
its dividend by 5 percent. 
    "It seems that the overall message is that everything is
peachy rosy," said Levente Mady, a senior portfolio manager at
PI Financial Corp in Vancouver. "The earnings are there and the
momentum is there. It's hard to argue with that."
    Some analysts have been wary about the prospects for gains
in bank stocks due to some weakness in the Canadian economy and
because the index's financial services sector was already up
about 5 percent this year.
    "Despite concerns about the housing slowdown in Canada, the
leveraged consumer and the potential fall in consumer spending,
these banks are still reporting pretty healthy numbers," said
Elvis Picardo, strategist and vice president of research at
Global Securities in Vancouver.
    He argued, however, that the rally in bank shares has made
valuations expensive, and investors might do well to take
profits. 
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 89.44 points, or 0.70 percent, at 12,821.83.
Eight of the 10 main sectors on the index were higher.
    Shares of Toronto-Dominion Bank rose 0.7 percent to
C$84.85 after Chief Executive Ed Clark poured cold water on the
idea that the bank might buy Royal Bank of Scotland's 
Citizens Bank unit.
    The country's No. 2 lender reported a 21 percent rise in
quarterly profit, driven by loan growth at its Canadian and U.S.
retail banks. It raised its dividend by 5 percent. 
 
    Canadian Imperial Bank of Commerce stock dropped 0.9
percent to C$83.14 after Canada's fifth-largest lender reported
a 4 percent drop in quarterly profit due largely to a charge for
a legal settlement. 
    Industrial shares climbed 1.2 percent, with Canadian
National Railway Co gaining 2.9 percent to C$104.66 and
playing the biggest role of any single stock in leading the
index higher.
    CN Rail, up about 16 percent since the start of the year,
said it was teaming with LBC Tank Terminals to increase its
shipments of heavy Alberta crude. 
    The index's materials sector, which includes mining stocks,
slipped 0.3 percent and was the biggest single drag on the
market. The group is down about 9 percent since the start of the
year, making it the worst performing sector of 2013 so far.
    As has happened several times this week, the biggest
decliners were gold-mining stocks, which followed the price of
bullion lower. 
    Picardo said that while "gold seems to have lost its
safe-haven allure," gold-mining stocks might be a smart
investment at current levels. 
    "At these prices, the sector is factoring in the worst-case
scenario. We think there's very good value in gold stocks," he
said.
    Barrick Gold Corp, the world's biggest gold miner,
fell 1.1 percent to C$31.27. 
    In other company news, Valeant Pharmaceuticals International
Inc said it is in active talks to make more
acquisitions, while posting a quarterly loss. The drug maker's
shares rose 1.9 percent to C$69.55.
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