TORONTO - The Toronto stock market headed higher mid-afternoon Wednesday, as rising financials balanced another day of losses in energy stocks after the release of data showing that U.S. inventories of crude and gasoline were much higher than expected.
New York indexes on the other hand were sharply higher as oil prices fell for a second day while investors took in some rare good news from the financial sector but a much higher than expected reading on inflation.
Toronto's S&P/TSX composite index gained 72.92 points to 13,430.48.
The TSX was also supported by strong gains in the tech, consumer and telecom sectors -- all up more than two per cent.
A selloff in financials and oil stocks had sent the Canadian market benchmark down almost 400 points on Tuesday after Federal Reserve chairman Ben Bernanke delivered a gloomy assessment of the U.S. economy and warned that rising prices for energy and food are elevating the risks of inflation.
His comments helped spark a drop in the price of oil on concerns over falling demand, along with a prediction from the OPEC cartel that growth in world oil demand will ease next year.
The TSX energy sector, which dropped 4.3 per cent Tuesday, was down a further 2.5 per cent on Wednesday.
"What's actually happening right now is the only place fund managers have made any money is in the oil stocks,'' said Bill Harris, energy and mining specialist at Avenue Investment Management.
"And if you want to protect your performance, the last thing you want to do is have the oil stocks fall.''
The August crude contract on the New York Mercantile Exchange fell $4.36 to US$134.38 a barrel -- on top of a US$6.44 slide Tuesday -- after the Energy Information Administration reported U.S. crude oil supplies jumped by three million barrels last week, the opposite of the three-million barrel decline analysts surveyed by energy research firm Platts expected.
Gasoline supplies also jumped unexpectedly, by 2.4 million barrels.
EnCana Corp. gave back $2.40 to $80.82 and Suncor Energy Inc. declined $1.95 to $55.97.
The TSX Venture Exchange dipped 8.33 points to 2,301.75 while the Canadian dollar was down 0.06 of a cent to 99.71 cents US.
Statistics Canada reported that manufacturing sales rose 2.7 per cent in May. It was the fourth increase in five months, with rising prices for petroleum and coal products accounting for most of the growth.
Investors also mulled over a think-tank's prediction of better economic growth than that forecast Tuesday by the Bank of Canada.
The Conference Board of Canada says falling exports and rising consumer pessimism are expected to limit Canadian economic growth to 1.7 per cent this year. That is considerably higher than the Bank of Canada's downward revision Tuesday for gross domestic product to one per cent growth.
New York's Dow Jones industrials rose 169.11 points to 11,131.65 after Tuesday's 93-point slide took the blue chip index below 11,000 for the first time since July 2006.
The Nasdaq composite moved up 50.47 points to 2,266.18. The tech-heavy index was supported by Intel as the chip giant beat profit expectations by three cents a share. Its shares improved 16 cents to US$20.87.
The S&P 500 index added 17.8 points to 1,232.71 as Wells Fargo beat market expectations, despite a 22 per cent decline in second-quarter profit as more customers at the fifth-largest bank in the U.S. failed to pay back their loans. The bank raised its dividend at a time when many other financial institutions are slashing their payouts, and its shares jumped $5.25 to US$25.76.
Fannie Mae and Freddie Mac moved higher on new rules announced by the Securities and Exchange Commission to clamp down on short-selling shares of the two U.S. mortgage giants.
There has been widespread concern that negative bets from short sellers have added to the sector's problems.
Fannie Mae shares jumped $1.22 to US$8.29 while Freddie Mac shares gained 95 cents to US$6.21.
The TSX financial sector was up 3.6 per cent following Tuesday's slide of over two per cent with Royal Bank up $1.53 to $41.71 and Bank of Montreal ahead $1.95 to $41.42.
The Hudson's Bay Co., Canada's oldest company, has been bought by the private equity firm which owns American department store chain Lord & Taylor. HBC is a privately held company that owns The Bay, Zellers and other retail chains.
The U.S. Labour Department reported its consumer price index rose 1.1 per cent in June against the 0.8 per cent gain that economists had expected. The core reading, which excludes volatile food and energy costs, ticked up 0.3 per cent.
Other data showed U.S. industrial output rose in June at the fastest pace in 11 months. However, the 0.5 per cent boost came from the end of an automotive production strike at American Axle rather than any underlying strength.
Meanwhile, Moody's Investors Service is reviewing Chrysler LLC for a possible downgrade and keeping a negative outlook on Ford Motor Co., citing the market shift away from trucks and SUVs.
Shoppers Drug Mart Corp. rang up a 9.4 per cent increase in second-quarter sales to $2.11 billion as the company reported growth across the country. Sales at stores open a year or more were up 4.6 per cent and net income rose 14.4 per cent to $128.3 million or 59 cents per share and its shares ran ahead $2.97 to $54.07.
An Ontario Superior Court judge has ordered a new vote by shareholders of Biovail Corp., following a challenge by founder Eugene Melnyk who wants to shake up the drugmaker's board and management. The company's shares advanced 20 cents to $9.96.
Heroux-Devtek Inc. announced a deal to make major structural components for the new Bell 429 helicopter. The agreement, running until 2015, has an estimated value of C$57 million and Heroux-Devtek shares rose 20 cents to $7.75.
