The Toronto stock market broke ranks with major exchanges in the U.S. and Europe on Wednesday, retreating for a second day as profit-takers sold gold producer shares.
The S&P/TSX fell 59.69 points, to 1,2042.29. Shares of Iamgold Corp. fell 5 per cent, Detour Gold 4 per cent and Gammon Gold 3 per cent. Kinross was off almost 2 per cent. The second-biggest decliner of the session was auto parts giant Magna International, which fell almost 5 per cent after JP Morgan Chase & Co. lowered its rating on the shares to "neutral" from "overweight."
The price of bullion declined by $1.80(U.S.) to $1,257.50 an ounce, as investors drew confidence from successful bond sales in Poland and Portugal and shifted some money back into riskier assets such as stocks. Gold prices remain close to their high, however, suggesting that the market remains unconvinced about the strength of the recovery.
During afternoon trading, the U.S. Federal Reserve released a survey that found the economy had lost momentum this summer. Five regional banks reported "economic growth at a moderate pace," two pointed to "positive developments or net improvements" and the remaining five said conditions were mixed or decelerating.
The news appeared to have little effects on the markets, which focus on forward-looking data. The Dow Jones industrial average rose 46.32 points to 10,387.01. The broader S&P 500 increased by 7.03 points to 1,098.87.
Financial stocks proved strong across the board. Regulators in Europe reportedly are close to a plan that would increase capital ratio requirements but give banks additional time to implement the stricter measures. In Canada, meanwhile, the Office of the Superintendent of Financial Institutions said it's close to removing the constraints on Canadian banks that has required them to hold excess capital. Investors are hoping some of that freed cash will be directed towards dividend hikes, perhaps as early as December.
Bank of Montreal shares led the rise among the biggest Canadian financials, up almost 2 per cent. But Bank of Nova Scotia dipped 17 cents to $52.28. Manulife Financial shares were the most active by volume in Toronto and ended the session off nearly 2 per cent.
In New York, JP Morgan Chase & Co. shares rose 2 per cent and Bank of America gained 1 per cent. Hewlett-Packard and Intel Corp. led the decliners on the Dow Jones index after UBS AG cut its ratings on each, citing weaker-than-expected sales forecasts for PCs.
The Canadian dollar rose more than one cent to 96.51 cents (U.S.) after the Central Bank of Canada raised its key overnight lending rate, for a third time this summer, by 25 basis points to 1 per cent. The price of a barrel of oil increased for the third session in a row by 58 cents to $74.67.