Toronto stock market flat amid Greek worries

A group of men walks past a building in Toronto that used to house the Toronto Stock Exchange on August 18 2011. THE CANADIAN PRESS/Aaron Vincent Elkaim

TORONTO - The Toronto stock market was slightly higher Wednesday as traders bid up commodity stocks that were badly beaten down over the last five sessions amid political turmoil in Greece and worries about slowing economic conditions.

The resource-intensive S&P/TSX composite index shook off early triple-digit losses and was up 11.3 points at 11,716.04 at mid-afternoon. The string of losses left the TSX more than two per cent below where it started 2012. The TSX Venture Exchange gained 9.85 points to 1,348.22.

The Canadian dollar was below parity with the U.S. currency as traders continued to avoid riskier assets such as oil and metals and resource-based currencies like the loonie. But the currency was also off the worst levels of the session, down 0.22 of a cent to 99.95 cents US.

U.S. markets bounced off session lows as the Dow Jones industrial average fell 53.4 points to 12,878.69.

The Nasdaq composite index dropped 4.42 points to 2,941.85 and the S&P 500 index lost 4.2 points to 1,359.52.

"Fear over the potential for a Greek exit from the euro continues to weigh on most assets," said a commentary from Barclays Capital.

Greece has weighed on markets since inconclusive elections Sunday failed to produce a party that could form a government.

After the conservative New Democracy failed to muster enough support to form a government, the mandate has passed onto Syriza, a left-wing party that came a surprise second in the election.

Its leader, Alexis Tsipras, said Tuesday that Greece was no longer bound by its promises to cut spending sharply. But failure to keep those promises could see international lenders cut off rescue funding, which would likely lead Greece to default and exit the euro common currency. It would also send shock waves through the eurozone banking system.

"And the reality is the whole European banking system has all this Greek debt on their books. It’s unbelievable the amount of debt that is out there," said Jim Muir, director at Fraser Mackenzie.

Tsipras is not expected to be able to form a government and most observers think a second election will be called for June. But analysts warn that Greece could run out of money as soon as next month without a government to negotiate the next level of its bailout.

Signs of a slowing global economy have also weighed on markets in the wake of weak manufacturing data from Europe and China and a much weaker than expected U.S. employment report last Friday.

The gold sector was the major advancer, up three per cent despite a retreat in bullion prices with the June contract down $10.30 to US$1,594.20 an ounce. Barrick Gold Corp. (TSX:ABX) gained $1.34 to C$38.05 while Goldcorp Inc. (TSX:G) climbed $1.45 to C$35.85.

Kinross Gold Corp. (TSX:K) added two cents to $7.77 even as it reported a first-quarter profit of US$105.7 million, down from US$250.1 million a year ago, as production slipped. Sales totalled US$1.04 billion, up from US$937 million.

The base metals component gained 0.58 per cent though metal prices also fell, with the July copper contract in New York down two cents at US$3.66 a pound. Copper, viewed as an economic bellwether because it is used in so many industries, has fallen more than five per cent this month. First Quantum Minerals (TSX:FM) gained 37 cents to C$18.36 while Thompson Creek Metals (TSX:TCM) was 20 cents higher at $4.39.

The energy sector was ahead 0.26 per cent as the June crude contract on the New York Mercantile Exchange declined 54 cents to US$96.47. Suncor Energy (TSX:SU) fell 53 cents to C$29.24 while Cenovus Energy (TSX:CVE) moved up 53 cents to $32.69.

The financials sector was the biggest drag, down 0.46 per cent as Royal Bank (TSX:RY) lost 50 cents to $53.59 and TD Bank (TSX:TD) gave back 54 to $79.88.

Railway stocks also lost more ground, with Canadian National Railways (TSX:CNR) down $1.12 to $81.08.

Canadian Pacific Railway (TSX:CP) was off 46 cents at $73.23 as an attempt by New York investment firm Pershing Square Capital Management to have its nominees join CP's board of directors and replace chief executive Fred Green gained more momentum. Pershing Square said proxy advisory firm Glass, Lewis & Co. and credit rating agency Egan-Jones Ratings Co. are now backing its plan to revamp CP’s board.

On the earnings front, Tim Hortons Inc. (TSX:THI) said quarterly net income was up 10 per cent from a year ago to $88.8 million or 56 cents a share. Total revenues were up by 12.1 per cent to $721.3 million, but its shares shed $1.38 to $55.70.

In the media sector, Quebecor Inc. (TSX:QBR.B) said its first-quarter net income rose to $72.9 million, or $1.15 per share, from $34.3 million, or 53 cents per share, a year ago. Its stock slipped 50 cents to $36.95.

And Torstar Corp. (TSX:TS.B) shares were off 13 cents at $9.97 as it reported net income of $29.3 million, or 37 cents per share, in the first quarter of 2012. That is up from $15.5 million, or 20 cents, in the first quarter of 2011.