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The Globe and Mail

At midday: S&P 500 hits record high, TSX slides

Trader Scott Gueli reacts on the floor of the New York Stock Exchange March 4, 2014. U.S. stocks rallied on Tuesday with the S&P 500 closing at a record high.

Brendan McDermid/Reuters

World stock markets climbed closer to record levels on Tuesday on expectations the European Central Bank will extend its easy monetary policy, while gold slipped to a one-month low following upbeat U.S. economic data.

Wall Street's S&P 500 hit a record high, led by gains in utility stocks as data showed orders for long-lasting U.S. manufactured goods unexpectedly rose in April.

U.S. markets were also catching up to the ECB news after markets were closed on Monday for Memorial Day.

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The Dow Jones industrials were ahead 80.39 points to 16,686.66, the Nasdaq ran up 42.15 points to 4,227.96 and the S&P 500 index gained 10.81 points to 1,911.34.

ECB chief Mario Draghi on Monday bolstered views that the bank will cut euro zone interest rates again next week. Other policymakers drove home the message on Tuesday.

In Toronto, falling mining stocks pushed the TSX lower Tuesday, but it found some lift from financials after Scotiabank posted earnings that beat analysts' forecasts.

The S&P/TSX composite index was down 53.55 points to 14,662.14 as Scotiabank boosted its second-quarter net profit by 14 per cent to $1.8-billion, helped by its Canadian banking and global wealth and insurance segments. Adjusted diluted earnings per share were $1.40, beating analysts' estimates of $1.31 a share. However, the provision for credit losses was up $32-million to $375-million in the quarter, primarily due to higher provisions in its international banking segment. Scotiabank shares were up 73 cents to $68.73.

The strong showing followed reports last week from Royal Bank and TD Bank, which also beat expectations. The rest of the banks report this week and National Bank was set to hand in earnings Tuesday after the market close.

The Canadian dollar lost early traction to move down 0.08 of a cent to 92.0 cents (U.S.).

The U.S. Commerce Department reported Tuesday that orders for durable manufactured goods rose 0.8 per cent after a 3.6 per cent gain in March. But the April strength came from a big jump in demand for defence goods, including airplanes. Excluding defence, orders would have fallen 0.8 per cent in April.

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Orders for core capital goods, a category viewed as a good proxy for business investment plans, fell 1.2 per cent in April.

Other data showed that the Case-Shiller house price index showed that prices rose 0.9 per cent in March.

And there was a slight uptick in consumer confidence during May.

The Conference Board's measure of sentiment edged up marginally to 83 from a downwardly revised 81.7 in April.

The Scotiabank results sent the financial index on the TSX up 0.35 per cent.

The gold sector was the biggest drag, down three per cent with June bullion down $22.80 to $1,268.90 (U.S.) an ounce as risk concerns about Ukraine abated somewhat after elections over the weekend yielded a clear winner.

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Further, gold failed to find lift from news of increased violence as fighting between Ukrainian troops and separatist rebels reportedly killed dozens in the eastern city of Donetsk.

An easing of Ukraine concerns also pushed July crude in New York down 16 cents to $104.19 a barrel and the energy sector dropped 0.86 per cent as The base metals sector gave back some of last week's 3.3 per cent run up, down one per cent, while July copper was up a penny at $3.18 a pound.

There was also major buying activity in the food business as Pilgrim's Pride offered to acquire meat producer Hillshire Brands in a deal worth about $5.58-billion (U.S.). The poultry producer is offering $45 per share for Hillshire, which makes Hillshire Farm lunch meats and Jimmy Dean sausages, which is a 24 per cent premium to Hillshire's closing price Friday. Pilgrim's Pride says the deal is a better offer than Hillshire's plan to buy Pinnacle Foods for $4.23-billion. Pinnacle makes Birds Eye frozen vegetables and Duncan Hines cake mixes.

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