TSX ekes out gain as energy rally offsets broad drop

TORONTO (Reuters) - Canada’s main stock index eked out a small gain on Tuesday as a rally in energy stocks single-handedly held off steep declines in a range of industrial, consumer and mining shares.

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014. REUTERS/Mark Blinch

The Toronto Stock Exchange’s S&P/TSX composite index ended a seven-day win streak on Monday that took it to its highest since September, and has since fluctuated around 15,400 points.

The index ended up 5.69 points, or 0.04 percent, at 15,389.28 on Tuesday. Of the 10 main sectors, only energy rose.

One fund manager said the rebound in energy stocks was helped by a range of factors, including rising geopolitical concerns in the Middle East, a more optimistic view on merger opportunities and the long-term oil price outlook after Royal Dutch Shell made a bid for BG Group last week.

Investors who believe oil will recover robustly from the stunning price retreat since last June would find valuations reasonable, said Gavin Graham, chief strategy officer at Integris Pension Management Corp.

“They’re not necessarily cheap,” he said.

Energy stocks, which account for 30 percent of the index’s weight, have in recent months hurt the TSX while markets in the United States and Europe have surged.

“The markets with a big weight in commodity producers, particularly energy, they’ve all been these laggards in what has been a really strong bull market phase for the last six months.”

Shares of Canada’s two largest rail operators fell, with Canadian National Railway Co slipping 0.9 percent to C$82.26, and Canadian Pacific Railway Ltd falling 1.3 percent to C$233.16.

The two company’s shares were hit after analysts cut their price targets. The overall industrials group retreated 0.6 percent.

Fertilizer company Potash Corp gave up 1.2 percent to C$40.98.

Media and cable company Shaw Communications Inc was also a major decliner after the company, hurt by a slide in video subscriptions, reported a 24 percent slide in profit. Its shares were down 2.8 percent at C$28.10.

“The markets ... continue to consolidate the recent rally,” said Fergal Smith, managing market strategist at Action Economics.

Smith said risks for the equity market remained Greece debt and uncertainty over the U.S. economic outlook and what that means for the Federal Reserve.

Additional reporting by Solarina Ho; Editing by Jonathan Oatis, Steve Orlofsky and Diane Craft