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Although Canada would be a big beneficiary of resurgence in U.S. growth, the domestic equity market – still 36 per cent materials and energy stocks – would be hurt by declining resource demand in the emerging markets, according to Goldman’s 2014 outlook . (Frank Gunn/THE CANADIAN PRESS)
Although Canada would be a big beneficiary of resurgence in U.S. growth, the domestic equity market – still 36 per cent materials and energy stocks – would be hurt by declining resource demand in the emerging markets, according to Goldman’s 2014 outlook . (Frank Gunn/THE CANADIAN PRESS)

At the open: TSX falls, Bank of Montreal shares slip Add to ...

The Toronto stock market headed lower amid pressure from financials even as Bank of Montreal (TSX:BMO) announced a dividend increase and posted adjusted earnings that beat expectations.

The S&P/TSX composite index fell 86.73 points to 13,332.84.

Bank of Montreal’s annual net profit hit a record $4.2 billion in 2013. That included $1.088 billion of net income in the fourth quarter, which was up one per cent from a year earlier. Its adjusted net income fell two per cent from a year ago to $1.102 billion or $1.64 a share but that beat expectations of $1.58 a share.

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But there was a drop in capital-markets income, and profits from U.S. personal and commercial banking also fell. Also, return on equity was 15 per cent versus 15.6 and one analyst says the adjusted earnings included 19 cents per share of one-time profit. BMO’s stock fell $2.34 or 3.18 per cent to $71.19.

The bank’s quarterly dividend will be increased by two cents to 76 cents per common share, starting with the February payment.

Elsewhere, Potash Corp. (TSX:POT) shares were off a penny to $33.70 after the fertilizer giant said that it is cutting its workforce by about 18 per cent, affecting about 1,045 people. The Saskatoon-based company says the decision is necessary because of soft demand for potash and phosphates.

The Canadian dollar was down 0.12 of a cent 93.86 cents US after the loonie closed below 94 cents US Monday for the first time since Aug. 31, 2010.

U.S. indexes were also weak with the Dow Jones industrials off 68.2 points to 15,940.57, the Nasdaq fell 8.15 points to 4,037.11, while the S&P 500 slipped 5.6 points to 1,795.3.

There is lot of U.S. economic data coming out this week, culminating with the release of the government’s employment report coming out on Friday.

A strong employment report would raise concerns that the Fed is set to start tapering its US$85 billion of monthly bond purchases that have kept U.S. interest rates low and persuaded many investors to seek higher returns in the stock market.

Economists forecast that the American economy cranked out about 175,000 jobs during November, down 5,000 from October.

Canadian employment numbers also come out on Friday with economists expecting about 7,500 jobs were created during the month.

Other key U.S. data out this week includes trade data for October, new home sales, a report on the latest reading on the health of the U.S. non-manufacturing sector and the latest reading of the U.S. economy from the Fed on Wednesday.

Another key Canadian report for the week is the merchandise trade balance report for October, which is being released on Wednesday. A steady run of trade deficits is one reason the loonie has tumbled more than seven cents US this year.

Other headwinds include a U.S. dollar that has risen alongside Feb speculation about tapering and a belief that the Bank of Canada won’t raise rates until at least 2015.

The Canadian central bank makes its next interest rate announcement Wednesday morning.

The TSX financial sector lost 1.1 per cent. CIBC (TSX:CM) lost 83 cents to $90.55.

The base metals sector was down 0.8 per cent while March copper was down one cent to US$3.17.

The energy sector was off 0.13 per cent while oil prices were slightly higher in the wake of a stronger than expected reading on U.S. manufacturing Monday and ahead of a meeting of the Organization of Petroleum Exporting Countries in Vienna on Wednesday.

Analysts at JBC Energy in Vienna estimate that OPEC’s crude output fell to 29.44 million barrels a day in November, the lowest since May 2011 and the third straight month with output below 30 million.

The January crude contract on the New York Mercantile Exchange edged three cents higher to US$93.85.

The gold sector was the leading advancer, managing a 0.1 per cent gain while February gold erased early advances to fade $2.80 to US$1,219.10.

European bourses were lower with London’s FTSE 100 index down 0.77 per cent, Frankfurt’s DAX lost 1.07 per cent and the Paris CAC 40 fell 1.78 per cent.

Earlier in Asia, Japan’s Nikkei 225 added 0.6 per cent, Hong Kong’s Hang Seng shed 0.5 per cent, China’s Shanghai Composite recovered from early losses, finishing 0.7 per cent higher, Australia’s S&P/ASX 200 fell 0.4 per cent, South Korea’s Kospi dropped 1.1 per cent.

 
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