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At midday: TSX rises despite fall from HBC, energy stocks

Trader Mark Muller works on the floor of the New York Stock Exchange, Wednesday, Dec. 6.

Richard Drew/AP

Canada's main stock index turned higher on Wednesday as banks and industrial stocks rose, offsetting a slump in department store operator Hudson's Bay Co after it reported a deeper-than-expected loss. Energy stocks fell with lower oil prices.

At 11:15 a.m. ET, the Toronto Stock Exchange's S&P/TSX composite index was up 63.90 points, or 0.39 per cent, to 15,977.67.

Seven of its 10 main groups were higher.

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The heavyweight financial group gained 0.7 per cent, industrials rose 0.9 per cent, and the materials group, which includes precious and base metals miners and fertilizer companies, were flat.

WestJet Airlines Ltd rose 0.6 per cent to $26.57 after announcing a joint venture with Delta Air Lines to boost trans-border flights. It said it expects to nearly double its fleet by 2020 to meet growing passenger traffic.

Hudson's Bay Co was down 13.6 per cent to $10.28, on track for its sharpest one-day fall ever, after the dismal quarterly performance. The owner of the Saks Fifth Avenue luxury retailer said the loss was due to lower traffic, steep discounts and the effects of the hurricanes in Texas, Florida and Puerto Rico.

The energy group retreated 0.7 per cent, while U.S. crude prices fell.

Dollarama Inc fell 1.7 percent to $150.38 despite the discount store chain's third quarter profit topping estimates, as comparable store sales missed estimates.

Rogers Communications Inc rose 1 per cent to $66.10 after reports it is considering the sale of the Blue Jays baseball team and its stake in Cogeco Inc.

The Canadian dollar was trading at 78.25 U.S. cents, down 0.77 per cent.

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Canadian government two-year bonds fell 0.043 to yield 1.494 per cent and the 10-year fell 0.041 to 1.854 per cent.

A gauge of global stocks fell on Wednesday and benchmark government bond yields declined as investors weighed signs of risk in the markets and with U.S. policy.

MSCI's gauge of stocks across the globe shed 0.36 per cent, while Wall Street's main indexes edged higher in choppy trading.

Stocks have paused after getting a fresh leg to their record-setting rally, fueled by improving prospects for a U.S. bill that would slash corporate taxes.

But investors are now waiting to see the final tax legislation, while a potential U.S. government shutdown looms if Congress fails to agree on a spending package.

At the same time, markets have flashed some concerning signals. Copper, which is seen as an indicator of global demand, posted its biggest decline in more than two years on Tuesday, while the U.S. yield curve between two- and 10-year Treasuries continued to flatten, another potential indicator of worries about the economy.

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"There are some inconsistencies in the market right now with what appears to be a very positive economic backdrop," said Walter Todd, chief investment officer at Greenwood Capital Associates in Greenwood, SC.

The Dow Jones Industrial Average rose 12.89 points, or 0.05 per cent, to 24,193.53, the S&P 500 gained 1.66 points, or 0.06 per cent, to 2,631.23 and the Nasdaq Composite added 12.22 points, or 0.18 pe rcent, to 6,774.43.

Areas such as banks, transports and telecoms, expected to benefit from lower corporate taxes, have rallied as prospects for the legislation improved.

In Europe, the pan-European FTSEurofirst 300 index lost 0.01 per cent.

U.S. Treasury yields fell across the board as risk appetite slid, while German 10-year government bond yields hovered near three-month lows.

"This market is like a junkie, waiting for the next fix," said Bruno Braizinha, interest rates strategist at Societe Generale in New York.

"All the good news seems to have been priced in: the U.S. tax reform, the Federal Reserve hike next month and next year. So now the market is waiting for the next positive thing," he added.

Benchmark 10-year notes last rose 9/32 in price to yield 2.3242 per cent, from 2.356 per cent late on Tuesday.

The dollar index rose 0.21 per cent, with the euro down 0.3 per cent to $1.1789.

Copper steadied after its sharp falls in the previous session, while other metals fell on concerns that China could see a weaker first half of 2018 and as investors looked to reduce their long exposure before the end of this year.

Copper rose 0.34 per cent to $6,565.50 a tonne, after falling more than 4 percent on Tuesday.

Spot gold dropped 0.2 per cent to $1,263.61 an ounce.

Oil fell 2 per cent on Wednesday after a sharp rise in U.S. inventories of refined fuel suggested demand may be flagging, while U.S. crude production hit another weekly record.

Government data showed that U.S. crude stocks fell 5.6 million barrels, more than expected, though that was partially the result of the closure of the Keystone pipeline after a leak in South Dakota in mid-November, which cut flows to Cushing, Okla. That line reopened Tuesday.

However, gasoline stocks rose by 6.8 million barrels and distillate inventories were up 1.7 million barrels, both exceeding expectations in a Reuters poll.

That hit prices of both crude and products in a market which is already heavily tilted bullish and thus potentially vulnerable to a selloff, analysts said.

Gasoline stocks tend to build in December, but at 221 million barrels of inventory, stocks are slightly above the five-year average for this time of year.

U.S. crude production rose to 9.7 million barrels per day, another weekly record, though short of all-time records reached in the 1970s. That increase may undermine efforts by global producers to cut supply.

Supply cuts by the Organization of the Petroleum Exporting Countries, Russia and other producers that were extended at a meeting last week for the whole of 2018 have helped lift Brent prices by more than 40 percent since June.

Prices have slipped from November's peak, which represented two-year highs.

"The sentiment-driven support to crude oil prices has somewhat dissipated as market participants look beyond last week's OPEC meeting," said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London.

Brent crude futures were down $1.23, or 2 percent, at $61.63 a barrel, after reaching a session high of $62.93, while U.S. crude futures dropped $1.29, or 2.3 per cent, to $56.33.

Russian Oil Minister Alexander Novak said it was too early to talk about exiting the OPEC agreement, and that the process would be gradual. Analysts such as Goldman Sachs have said that the expected rise in demand in 2018 would mostly be offset by U.S. and Canadian supply growth.

U.S. oil production has climbed by 15 percent since mid-2016 to 9.7 million bpd, close to levels of top producers Russia and Saudi Arabia.

"With U.S. production, we're still in the throes of seeing that go ever higher. There's only going to be more production coming which is very problematic for OPEC non-OPEC deal adherence," said John Kilduff, partner at Again Capital in New York.

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