CANADA STOCKS-TSX retreats on banks, golds despite Canadian Tire surge

Thu May 9, 2013 10:20pm BST

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* TSX falls 41.15 points, or 0.33 percent, to 12,543.90
    * Six of 10 main sectors advance
    * Canadian Tire jumps 11 percent on plans to create REIT
    * Sun Life falls after profit drop
    * Bombardier up after CSeries comments, results

    By John Tilak
    TORONTO, May 9 (Reuters) - Canada's main stock index fell on
Thursday as weakness in financial and gold-mining stocks
overshadowed a jump in Canadian Tire Corp after the
retailer unveiled plans to launch a real estate investment
trust.
    Investors also tracked data showing U.S. jobless claims
unexpectedly fell in the latest week, dropping to the lowest
level in more than five years. That news, coupled with a
stronger U.S. dollar, weakened bullion prices and weighed on
gold shares. 
    Thursday's drop pulled the Toronto Stock Exchange's
benchmark index off the one-month high it hit in the previous
session, and it also ended, as did U.S. stock markets, a
five-day winning streak.
    "It's not a surprise that there is a pause now; maybe there
is some consolidation going on," said Shailesh Kshatriya, senior
investment analyst at Russell Investments Canada.
    The benchmark S&P/TSX composite index closed down
41.15 points, or 0.33 percent, at 12,543.90. Six of the 10 main
sectors on the index ended higher.
    Canadian Tire said it will create a C$3.5 billion ($3.5
billion) REIT through an initial public offering in the fall of
2013, sending its shares up 11.2 percent. 
    "It's a marvelous time," said John Ing, president of Maison
Placements Canada. "There's no question that there is demand,
and there is no question that they have lots of real estate."
    "There is a desperation for yield," he added. "These chains
have been sitting on classic real estate, and they're offering
yield in a yield-hungry market."
    Grocer Loblaw Companies Ltd announced a similar plan
in December, saying it will spin off the vast majority of its
property assets to create one of Canada's biggest REITs.
 
    Financials, the index's most heavily weighted sector, gave
back 0.8 percent and were the biggest drag on the market on
Thursday. Among them, Royal Bank of Canada, the
country's biggest bank, fell 0.8 percent to C$61.62.
    Insurer Sun Life Financial was down 1.2 percent at
C$29.23 after it reported a 25 percent drop in first-quarter
profit on Wednesday, hurt by less favorable financial markets
than in the year-before period. 
    Russell's Kshatriya said he is cautious on the prospects for
the TSX due in part to the outlook for financials. 
    "The trend for households will be to de-lever, be more
cautious about their spending, and the housing sector is slowing
down. All those will weigh on financials," he said.
    The index's materials sector, which includes mining stocks,
declined 0.7 percent. Barrick Gold Corp fell 2.1
percent to C$21.06.
    The gold-mining group, which suffered a huge selloff last
month, is down about 34 percent on the year.
    Kshatriya said that while the gold sector could still be
challenged, the valuations were becoming more appealing.
    "If there is one sector on the TSX that has some value, it
could very well be the gold sector," he said. "But it is not for
the faint of heart."
    In other company news, Bombardier Inc said its
CSeries jetliner was on track to make its first flight in June
and reported a 25 percent jump in first-quarter revenue on
robust growth at its aerospace unit. The stock rose 5.7 percent
to C$4.47. 
    Tim Hortons Inc is likely to raise its debt levels
and buy back shares but not to the extent that an activist
investor is pushing for, Paul House, chief executive of the
Canadian coffee-and-doughnut chain, told Reuters. The stock shed
2.4 percent to C$55.75.
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