08/12/2011 04:21 EDT | Updated 10/11/2011 05:12 EDT

TSX, Dow Jones Extend Gains Amid New Short Selling Rules, Retail Data


TORONTO - The Toronto stock market finished little changed Friday as a strong U.S. retail sales report raised hopes that a market bottom is near after three weeks of intense selling pressure that brought the TSX well into correction territory.

The S&P/TSX composite index added 2.4 points to 12,542.2, weighed down by declines in gold stocks as bullion prices stepped back. The TSX Venture Exchange was up 23.55 points to 1,817.36.

However, New York markets bounded ahead on hopes the retail data meant the economy wasn't quite as weak as previously believed.

The Dow Jones industrial average was up 125.71 points to 11,269.02. The Nasdaq composite index gained 15.3 points to 2,507.98 and the S&P 500 index was ahead 6.17 points to 1,178.81.

The Canadian dollar lost early lift, moving down 0.24 of a cent to 100.94 cents US.

Traders were pleased with data showing that U.S. retail sales rose 0.5 per cent last month, the best showing since a 0.8 per cent advance in March. And the government revised sales higher for the previous two months.

Investors also took in data showing the consumer sentiment index from the University of Michigan and Thompson Reuters tumbled to 54.9 in August, much lower than the 63.2 reading that had been expected.

Considering the intense volatility on stock markets resulting from fears about the European government debt crisis worsening, a growing feeling the U.S. is about to slip back into recession and the debate over raising the U.S. debt ceiling, some analysts thought that the reading could have been a lot worse.

"Is that a surprise?" said David Rea Ltd. CEO John O'Connell.

"It's amazing that people were that optimistic."

Investors felt more positive about the financial sector after a short-selling ban on financial shares in four eurozone countries helped stabilize French banks.

The stocks of French banks have been hammered because of concerns they will be hit with massive losses from European sovereign debt they hold. One European country after another has struggled with debt, with Spain and Italy becoming the latest to struggle.

The TSX financial sector came down from early gains to close flat.

Worries surrounding the debt crisis spread to France this past week, with the government trying to assure financial markets that it will not be downgraded from AAA. Standard & Poor’s rating agency stripped the United States of its top-notch AAA credit rating last Friday.

Eurozone debt worries, and what is perceived as a growing likelihood that the U.S. will slip back into recession, have hammered markets since July 22.

The TSX has run up about 870 points over the last three sessions as investors moved in to pick up stocks made much cheaper in the last few weeks. But the main index is still down more than seven per cent just since July 22 and down almost 13 per cent from the highs of early March. Earlier in the week, it was down almost 20 per cent.

"There's a lot of areas that were down more, like energy stocks down 30 per cent," added O’Connell.

"There's some really good, I think, pretty compelling values."

The TSX ended the week up 380 points or 3.12 per cent while the Dow industrials lost 176 points or 1.53 per cent.

Oil prices failed to add to Thursday's gain of almost US$3, with the September contract on the New York Mercantile Exchange down 34 cents at US$85.38 a barrel. The energy sector gained 0.27 per cent as Imperial Oil (TSX:CNQ) gained 33 cents to C$41.52 and Cenovus Energy (TSX:CVE) fell 35 cents to C$35.16.

The base metals sector was up 1.44 per cent, with copper prices unchanged at US$4.01 a pound following a 12-cent run-up on Thursday. First Quantum Minerals (TSX:FM) gained $1.16 to C$23.96 while Quadra FNX Mining (TSX:QUX) lost 37 cents to $13.

Taseko Mines Ltd. (TSX:TKO) shares fell 13 cents to $3.46 as the miner lost $1.1 million or a penny per share for the quarter ended June 30 compared with a profit of $44.8 million or 24 cents per share a year ago. Revenue totalled $48.3 million, down from $56.5 million.

The gold sector was the weakest group as the December bullion contract on the Nymex fell $8.90 to US$1,742.60 an ounce. Barrick Gold (TSX:ABX) faded 63 cents to C$49.12 and Goldcorp Inc. (TSX:G) lost $1.24 to $49.48.

In other earnings news, Wenzel Downhole Tools Ltd. (TSX:WZL), an energy drilling equipment and services company, reported its net profits rose sharply to $2.1 million from $1.2 million a year ago. Revenues increased 40 per cent to $18.3 million and its shares jumped 10 cents to $2.10.

Units in packaged ice maker Arctic Glacier Income Fund (TSX:AG.UN) plunged 6.5 cents or 42 per cent to nine cents after it said it lost $16.1 million or 41 cents per share in the second quarter. That compared with a profit of $1.1 million or three cents per share in the same period of 2010. Sales were $67.4 million versus $71.5 million.