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At the open: TSX lower as financial sector dips again

A Bay Street sign in Toronto’s financial district.


The Toronto stock market was lower Thursday amid a mixed bag of earnings from three of Canada's big banks while concerns about what the Federal Reserve will do with a key stimulus measure grew in the wake of more positive economic data.

The S&P/TSX composite index fell 69.58 points to 13,235.34.

The Canadian dollar was down 0.03 of a cent to 93.62 cents US.

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Toronto-Dominion Bank (TSX:TD) had $1.622 billion of net income in the fourth quarter, up from $1.597 billion a year ago. On an adjusted basis, TD earned $1.90 per share, up from $1.83 in the fourth quarter of 2012 but nine cents less than analysts had expected. TD also raised its dividend by a penny to to 86 cents a share and a two-for-one stock split effective early next month. Its shares fell $1.63 to $94.12.

Most of TD's major units showed increases but net income from wholesale banking fell by 61 per cent to $122 million from a year earlier, due to lower security gains and higher non-interest expenses.

Royal Bank of Canada (TSX:RY) had $2.119 billion of net income in its fiscal fourth quarter, an 11 per cent increase from last year. Adjusted diluted earnings per share was $1.42, four cents higher than analysts had forecast. Its dividend remains unchanged. But its shares fell 69 cents to $68.31 as Barclays analyst John Aiken pointed to both the wealth management and retail banking divisions as performing weaker than he expected.

RBC also announced that Gordon Nixon intends to retire effective Aug. 1, 2014, after 13 years as president and chief executive.

CIBC (TSX:CM) made $836 million in net income in its fiscal fourth quarter, down from $852 million in the same period last year. After adjusting for one-time items, earnings were $2.22 per share, seven cents ahead of estimates and up 8.8 per cent from a year ago. Revenue of $3.2 billion fell short of estimates of $3.26 billion and its shares slipped five cents to $90.

CIBC says its results were impacted in part by a $39 million restructuring charge relating to FirstCaribbean International Bank and a $35 million impairment of an equity position tied to its U.S. leveraged finance portfolio. A dividend increase had been expected but its dividend was unchanged .

U.S. indexes were lower on concerns about what the Federal Reserve will do with a key stimulus measure grew in the wake of more positive economic data.

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The Dow Jones industrials lost 31.53 points to 15,858.24 amid further positive news on the U.S. jobs front a day before the release of the government's employment report. The Labor Department reported that applications for jobless benefits, which are a proxy for layoffs, dropped 23,000 last week to 296,000.

Other data out Thursday morning showed that U.S. gross domestic product for the third quarter was revised upward to an annualized rate of 3.6 per cent from 2.8 per cent.

The Nasdaq declined 2.27 points to 4,035.73 and the S&P 500 index was down 4.15 points to 1,788.66.

Expectations for job creation in the government employment report moved higher after payroll firm ADP reported Wednesday that the private sector added 215,000 jobs last month. Prior to that report, markets had expected job creation of about 183,000.

But while a stronger report would be welcomed as another sign of an improving economy, it would also raise concerns that the Federal Reserve is getting close to cutting back on its US$85 billion of monthly bond purchases, a program that has kept long term rates low and supported a strong equity market rally this year.

On the TSX, the TSX financial sector was down 0.65 per cent. The component has been a drag this week as investors were also unimpressed with earnings from Bank of Montreal (TSX:BMO) and National Bank (TSX:NA). Still, the TSX financial sector started this week up more than 20 per cent year to date.

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Scotiabank (TSX:BNS) posts earnings on Friday. Its shares fell 57 cents to $63.13.

The gold sector fell 2.5 per cent as December bullion fell $23.10 to US$1,224.10. Goldcorp (TSX:G) fell 59 cents to $22.34.

Traders also looked to Barrick Gold (TSX:ABX) a day after Peter Munk announced he will retire next year from the board of the world's largest gold producer. Former Goldman Sachs executive John Thornton, who has shared the chairman's duties with Munk since 2012, will be named chairman. Its shares fell 16 cents to $16.56.

Munk's departure is part of broad changes at the gold miner, including the hiring of a chief operating officer and the nomination of four new independent directors.

Metals were lower as March copper declined three cents to US$3.22 a pound after the American jobs data, along strong housing and trade reports, helped push the metal up eight cents on Thursday. The base metals sector fell 0.9 per cent.

The energy sector declined 0.3 per cent while the January crude contract on the New York Mercantile Exchange slipped four cents to US$97.16 a barrel.

In other earnings news, Dollarama Inc. (TSX:DOL) says its third-quarter overall sales increased by 14.2 per cent to $522.9 million while comparable-store sales were up 4.8 per cent. Net income was $61.7 million, up from $51.48 million a year earlier, while diluted earnings per share for the Montreal-based discount retail chain rose to 87 cents per share from 68 cents. Its stock fell $2.68 to $84.42.

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