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Toronto-Dominion Bank reported return on common equity in 2012 from U.S. banking of 6.4 per cent. In Canadian banking, return on equity was 43 per cent. (MARK BLINCH/REUTERS)
Toronto-Dominion Bank reported return on common equity in 2012 from U.S. banking of 6.4 per cent. In Canadian banking, return on equity was 43 per cent. (MARK BLINCH/REUTERS)

At midday: RBC, TD earnings push TSX higher Add to ...

The Toronto stock market was higher Thursday amid solid earnings from Royal Bank and TD Bank, while miners got a boost from Chinese manufacturing data.

The S&P/TSX composite index gained 64.48 points to 14,714.34 as both banks beat analysts’ expectations and their share prices hit record highs.

The Canadian dollar was ahead 0.1 of a cent at 91.72 cents (U.S.) despite a worse than expected showing in retail sales during March.

Statistics Canada reported that sales actually fell 0.1 per cent in March to $41.1-billion. Economists had expected a gain of 0.3 per cent.

New York indexes were positive after racking up strong gains Wednesday in the wake of the release of minutes from late April’s Federal Reserve meeting, which reinforced expectations the U.S. central bank won’t rush to raise interest rates.

The Dow Jones industrials climbed 20.58 points to 16,553.64, the Nasdaq gained 20.13 points to 4,151.66 while the S&P 500 index added 4.97 points to 1,893.

Royal Bank’s quarterly net earnings were up 15 per cent from a year ago to $2.2-billion or $1.47 a share, helped along by record earnings in its wealth management segment. Cash diluted earnings per share were $1.49, beating estimates by five cents a share. RBC’s shares ran ahead $1.49 to $75.78 after going as high as $75.93.

And TD shares gained $1.20 to $53.10 after going as high as $53.32 as the bank reported quarterly net income of $1.98-billion, up from $1.71-billion in the same quarter of 2013. Diluted earnings per share were $1.04 in the quarter, compared with 89 cents year-over-year. Adjusted net income was up at $2.07-billion, or $1.09 diluted EPS, beating estimates by seven cents a share.

“I don’t know if this pace of outperformance is going to continue, but it certainly looks good for the banking system,” said Ian Nakamoto, director of research at 3MACS.

“I don’t see any kink in the armour (and) I think the next quarter will be quite strong,” he said.

Meanwhile, China’s manufacturing contraction eased in May, as HSBC’s preliminary purchasing managers’ index rose to 49.7 in May from 48.1 in April. Numbers above 50 on the 100-point scale indicate expansion.

The HSBC reading follows a similar survey by an official group that had also been showing signs of a rebound in China, with factory activity growing weakly in April.

Analysts say that the improvements in both surveys suggest the Chinese government’s targeted measures to support the economy are moderating the pace of the slowdown.

Elsewhere on the earnings front, electronics seller Best Buy says its quarterly net income was $461-million, or $1.31 (U.S.) per share, a turnaround from a loss of $81-million, or 24 cents per share, a year earlier. Adjusted earnings were 33 cents per share. Analysts expected 19 cents. Total revenue fell three per cent to $9.04-billion, well below expectations of $9.23-billion but its shares were up $1.35 to $26.70.

The base metals sector also supported the TSX, up 1.1 per cent as copper prices rose in the wake of the Chinese manufacturing data with the July contract up two cents to $3.14 a pound.

June bullion gained $9.60 to $1,297.70 an ounce and the gold sector was flat.

The energy sector was ahead 0.25 per cent, while July crude lost four cents to $104.03 a barrel.

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