TSX makes modest advance, weighed down by RBC earnings; N.Y. weak despite data

TORONTO - The Toronto stock market closed slightly higher Wednesday as the market benefited from higher commodity prices, but was held back by financials after Royal Bank (TSX:RY) delivered an earnings report that disappointed investors.

TORONTO - The Toronto stock market closed slightly higher Wednesday as the market benefited from higher commodity prices, but was held back by financials after Royal Bank (TSX:RY) delivered an earnings report that disappointed investors.

The S&P/TSX composite index advanced 24.54 points to 11,852.85.

The Canadian dollar rose 0.42 of a cent to 96.9 cents US, its highest close since mid-January.

RBC earned a $1.5-billion profit, up 35 per cent from a year before, with provisions for credit losses reduced by 37 per cent, falling to $493 million. However, cash earnings per share were $1.03, a penny short of analysts' expectations and its shares lost $1.03 to $57.21.

However, other analysts found much to be positive about in the RBC earnings.

"They tossed in $1.5 billion - that's unbelievable!" said Chris King, portfolio manager at Morgan, Meighen and Associates.

"At this point in the market, it's not a bad result. I think there's some positives in there, there's some less than expectation items on a few of their components but overall, I thought there was a decent result."

Elsewhere in the sector, Laurentian Bank of Canada (TSX:LB) shares rose $1.60 to $41.99 after it said its profit was up 28 per cent from a year ago to $32 million or $1.21 per common share in its most recent quarter. Revenue at the Montreal-based bank was up 15 per cent to $180.4 million.

The base metals sector led advancers, ahead 2.22 per cent as May copper climbed two cents at US$3.43. On the TSX, Teck Resources (TSX:TCK.B) gained 95 cents to C$41.15 and Equinox Minerals (TSX:EQN) was up 20 cents at $3.59.

The energy sector was up slightly as oil prices gained momentum, despite an increase in U.S. crude inventories of 4.1 million barrels last week, which was well over the estimate for one million barrels. However, distillates including heating oil and diesel inventories fell more than expected.

The April crude contract on the New York Mercantile Exchange gained $1.19 to US$80.87 a barrel. Suncor Energy (TSX:SU) climbed 53 cents to C$31.63 while EnCana Corp. (TSX:ECA) dipped 55 cents to $35.13.

Gold companies advanced as the April contract on the Nymex gained $5.90 to $1,143.30 an ounce. Goldcorp Inc. (TSX:G) ran ahead 70 cents to $41.43 while Barrick Gold (TSX:ABX) improved 50 cents to $41.45.

The telecom sector moved lower as Ottawa announced it intends to open the doors to allow foreign players into the market. Details of the shift will likely be announced in Thursday's budget. Rogers Communications (TSX:RCI.B) lost 84 cents to $34.16.

The TSX Venture Exchange rose 4.98 points to 1,553.13.

New York markets lost traction despite a generally favourable assessment of the economy by the U.S. Federal Reserve, and good news on the jobs front two days before the release of February U.S. government employment data.

New York's Dow Jones industrial average moved down 9.22 points to 10,396.76, the Nasdaq composite index dipped 0.11 of a point to 2,280.68 while the S&P 500 index inched up 0.48 of a point to 1,118.79.

Outplacement firm Challenger, Gray and Christmas said that major U.S. companies announced in February they would cut 42,090 jobs - the lowest monthly total since July 2006.

Hopes are high for Friday's U.S. jobs report but King thought that investors are likely willing to be forgiving if it misses expectations, because of the fierce winter weather that hit the U.S. Northeast last month.

"I think everybody realizes the U.S. data for February is going to be very skewed by the snowstorms," he said.

"And it'll be the month or two after that that things really matter and I think they will take positives out of it. I think the jobs might disappoint but you know it's going to be caught up in the month or two after and I think we might have a little surge at point."

Sentiment had been also improved by data showing further expansion in the U.S. services industries.

The Institute for Supply Management's services index for February rose to 53 from 50.5 in January. Economists had forecast that the index would hit 51.

Meanwhile, the Federal Reserve said that the U.S. economy is growing even though harsh snowstorms crimped activity in some parts of the country. Its so-called Beige Book also showed that the recovery is managing to plod ahead but not at a strong enough pace to persuade companies to ramp up hiring.

In other earnings news, newspaper, book and Internet publisher Torstar Corp. (TSX:TS.B) had a $57.4-million profit in the fourth quarter, a turnaround from the $213.9-million loss it reported a year earlier when the firm recorded major writedowns. Its shares rose 52 cents or 7.17 per cent to $7.77.

Technology licensing company Wi-LAN Inc. (TSX:WIN) said it lost $1.7 million in the 14 months ended Dec. 31. compared with a net loss of $9.2 million in the 12 months ended Oct. 31, 2008, when the company used a different year end. Yearly revenues increased to $35.4 million from $26.6 million.

The company also raised its revenue and earnings forecast for 2010 and its shares gained 15 cents to $2.95.

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