CANADA STOCKS-BMO dives, pulls TSX to five-week low

Tue Dec 3, 2013 5:23pm EST

* TSX falls 99.70 points, or 0.74 percent, to 13,319.87
    * Seven of 10 main index sectors decline
    * BMO slips 4.5 percent, weighs most on market
    * Potash up after announcing job cuts

    By John Tilak
    TORONTO, Dec 3 (Reuters) - Canada's main stock index fell on
Tuesday to its lowest in more than five weeks after Bank of
Montreal's quarterly results disappointed investors,
spurring a selloff that spread to the shares of other major
banks.
    BMO, the country's No. 4 bank and the first of the big
lenders to report earnings, gave back 4.5 percent, to C$70.25,
and had the biggest negative influence on the market.
    Also weighing on sentiment, recent positive economic data
out of the United States, including upbeat manufacturing numbers
on Monday, revived fears the U.S. Federal Reserve might begin a
scale-back, or tapering, of its monetary stimulus program sooner
than later.
    The Toronto stock market snapped a four-session run of gains
on Tuesday. In each of the past five months, the benchmark TSX
index has advanced.
    "We still have the cloud of tapering hovering over the
economy and the markets," said Paul Taylor, chief investment
officer at BMO Asset Management. "And no doubt when we get the
taper, it will be a cause for some short term negative sentiment
and volatility."
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 99.70 points, or 0.74 percent, at
13,319.87, after touching 13,279.08, its lowest since Oct. 24.
    Taylor expects the resource-focused Canadian market to end
2014 higher, but noted that significant headwinds remained.
    "We're still struggling with relatively weak commodity
prices, and our exports sector is not delivering in a meaningful
way enough to bolster stronger economic growth," he said.
    Seven of the 10 main sectors on the index were in the red on
Tuesday. 
    The financial sector gave back 1.6 percent. Royal Bank of
Canada fell 1.3 percent to C$69.56, and Toronto Dominion
Bank was down 0.8 percent at C$96.13. 
    BMO's fourth-quarter earnings rose 1 percent due to stronger
wealth management profit, but the stock was pulled down by the
sluggish performance of its U.S. Harris Bank unit. The bank also
raised its dividend. 
    "The important thing to look at is that BMO increased their
dividend and they're doing a share buyback," said Stan Wong,
vice president and portfolio manager at Richardson GMP Limited.
    "I'm pretty constructive on the banks," added Wong, whose
portfolio includes RBC and Bank of Nova Scotia. "The
banks can benefit from an improving economy and the fact that
investors are looking for visible yields that are also growing."
    Despite a slightly higher bullion price, gold-mining shares
slipped 1.4 percent. Goldcorp Inc lost 2.2 percent to
C$22.25 and Barrick Gold Corp declined 0.2 percent to
C$16.51.
    In other news, Potash Corp of Saskatchewan Inc said
it will cut its workforce by 18 percent as it struggles with
slumping demand and weak prices for the crop nutrient. The stock
rose 0.3 percent to C$33.82.
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