2nd straight down day for TSX

Utilities off, gold up

Apr. 28, 2010 (Baystreet.ca) --

The Toronto stock market closed lower as Europe's debt crisis spread to Spain, which had its credit rating downgraded one day after Greece's rating was lowered to junk status.

The S&P/TSX composite index lost 69.85 points to 12,076.89 following a triple-digit loss the previous session.

Losses were widespread, with gold stocks being a notable exception.

The financial sector declined, as RBC eased 1.22% to $60.58, CIBC lost 1.17% to $74.49 and Scotiabank fell 1.25% to $50.75

The Global Gold Index added strength as gold prices rose to their highest level in over four months on safe-haven demand.

Barrick Gold advanced 2.61% to $42.51 and Goldcorp rose 3.29% to $42.99.

The Canadian dollar got closer to parity with the greenback, regaining 0.80 cents to 99.16 cents U.S.

ON BAYSTREET

All but three of the 14 TSX subgroups were lower on the day. Utilities were the worst off, stepping back 1.9%, while financials were poorer by 1.4% and telecoms fell 1.1%.

The three gainers were gold, up 2.2%, materials, advancing 1.4%, and global base metals, moving ahead 0.5%.

The TSX Venture Exchange picked up 1.86 points to 1,660.35, while the Nasdaq Canada index regained 5.93 points to 786.32

ON WALLSTREET

In New York, blue chips gained Wednesday after the Federal Reserve said that economic activity is picking up, and that it will hold a key short-term interest rate steady for an extended period of time.

The Dow Jones industrial average advanced 53.28 points to 11,045.27, reclaiming the 11,000 level it lost in the previous day's selloff. The 11,000 level has psychological meaning, but is not a key technical level for traders.

The S&P 500 index remained above water by 7.65 points to 1,191.36. The Nasdaq composite index moved up 0.26 points to 2,471.73.

Stocks had surged more aggressively in the first 90 minutes after the roughly 2:15 p.m. ET Fed announcement, but gave up bigger gains late in the session.

Stocks had struggled earlier as earnings news vied with euro zone debt worries after Standard & Poor's cut Spain's rating, one day after lowering Portugal's debt rating and cutting Greece's rating to junk. The downgrades pummeled U.S. stocks Tuesday and also dragged on international markets Wednesday.

But the Fed announcement seemed to reassure investors, as it offered both a positive take on the economy and promised no change in interest rates for the foreseeable future.

Financial shares led the advance, with JPMorgan Chase, Bank of America and SunTrust Banks among the issues boosting the KBW Bank index. A rally in commodities gave a lift to oil, metal and mining shares.

The U.S. central bank held the fed funds rate steady at historic lows near zero, as expected, and also said that conditions "are likely to warrant exceptionally low levels of the federal funds rate for an extended period."

Once again, Federal Reserve Governor Thomas M. Hoenig dissented, objecting to the "extended period" phrase on worries about inflationary concerns.

The bankers also talked up the economy, saying activity has strengthened, the labour market is starting to improve and that household spending has picked up a bit, but not enough to drive inflation.

Internationally, Greece is facing a May 19 deadline for refinancing about $11.4 billion U.S. in debt and investors are worried it could default. Although Greece has gotten the OK to access over $53 billion U.S. in loans from the European Union and the International Monetary Fund, the funds have not yet been made available.

But worries were partly allayed Wednesday on reports that the loan package could be increased to as much as $160 billion U.S. Additionally, Germany -- the largest of the 16 euro-zone countries -- said its portion of the initial loan package could be approved by the end of next week.

Germany's perceived reluctance to ante up has added a layer of uncertainty to the proceedings.

Following the reports, the cost of insuring Greek debt dropped from record highs hit in the morning and the euro bounced back versus the dollar after falling to a one-year low.

Another batch of better-than-expected quarterly results helped give stocks some support.

Roughly 82% of earnings have topped estimates. Should that figure hold up, it would be the highest percentage of companies beating expectations in tracker Thomson Reuters history.

Dow Chemical reported higher quarterly sales and earnings that topped estimates, as higher pricing boosted global sales. Shares gained almost 5%.

Defense contractors General Dynamics and Northrop Grumman both reported higher quarterly earnings that topped estimates. General Dynamics reported weaker revenue that missed forecasts, sending shares a bit lower. Northrop Grumman reported higher revenue that topped estimates and also lifted its 2010 profit outlook, sending shares higher.

AOL reported quarterly earnings and revenues that fell from a year ago and missed expectations, as the company contended with dwindling sales and a weakening subscriber base. Shares fell 12%.

With 48% of the S&P 500 having reported results, earnings are on track to have grown 52% from a year earlier and revenues 12%, according to the latest info from tracker Thomson Reuters.

Treasury prices fell, raising the yield on the 10-year note to 3.77% from 3.69% Tuesday. Treasury prices and yields move in opposite directions.

The price of a barrel of oil gained 96 cents to $83.38 U.S.

Gold prices gained six dollars to $1,168 U.S. an ounce.