04/26/2012 08:58 EDT | Updated 06/26/2012 05:12 EDT

TSX heads into positive territory in Thursday afternoon trading, commodities up

TORONTO - The Toronto stock market finished Thursday higher as positive economic data on U.S. housing appeared to outshine several weak earnings reports from Canadian companies.

The S&P/TSX composite index was up 34.78 points at 12,145.85, while the TSX Venture Exchange lifted 22.12 points to 1,393.24.

The Canadian dollar moved down 0.05 of a cent to 101.63 cents US.

On Wall Street, markets got a pop from some optimistic housing data. A report by the National Association of Realtors measuring the number of people who have signed contracts for home purchases rose to its highest level in nearly two years.

Stock in home building companies trading in the U.S., including PulteGroup and Lennar, rose.

The Dow Jones closed 113.90 points higher to 13,145.85, the Nasdaq index gained 20.98 points to 3,050.61 and the S&P 500 index moved ahead 9.29 points to 1,399.98.

But share prices of several big name U.S. companies fell after reporting first-quarter earnings. Health insurer Aetna was one of the biggest losers. It plummeted 10 per cent after reporting that it is paying more in medical claims.

Earnings reports at other companies also underscored concerns that the impact of Europe's debt crisis will ripple across the ocean. Dow Chemical, the largest U.S. chemical maker, and UPS, the package delivery company, both fell on concern over European economies.

And the U.S. government reported that the number of people seeking unemployment benefits was little changed last week, stoking more uncertainty about when and if companies will return to pre-recession levels of hiring.

"We're very much in a market that's dominated by these larger news issues or macro factors, and we seem to be getting back to this risk-on, risk-off mind set," Garey Aitken, director of equity research at Bissett Investment Management said in an interview.

"We've seen quite a bit of volatility in lots of equity markets — Canada included — based on that. Maybe we've got a little bit of a reprieve today, but I don't think we're out of the woods by any means."

The TSX materials sector was off 1.9 per cent as Potash Corporation of Saskatchewan (TSX:POT) disappointed on its first-quarter earnings with sales and profit down even more than analysts expected.

Canada's largest fertilizer company said net income fell to US$491 million or 56 cents per share in the first three months of 2012, down from record high profits of US$732 million or 84 cents per share in the first quarter of 2011. Potash shares dropped three per cent, or $1.40 to $42.25.

Domtar Corp. (TSX:UFS) said its first-quarter profit fell sharply from the same time last year, missing analyst estimates, as it felt the impact of lower global prices for pulp and higher costs.

The Montreal-based company posted net income or 76 cents per share. That's down from US$133 million or $3.14 per share in the comparable period of 2011. Its shares were off 6.6 per cent to $88.09.

The TSX oil and gas sector rose 1.3 per cent as oil prices closed higher with the June crude contract on the New York Mercantile Exchange up 43 cents to US$104.55 a barrel.

Gold bullion prices increased $18.20 to US$1,660.50 an ounce.

Goldcorp Inc. (TSX:G) shares were impacted by the company's disappointing first-quarter results as it faced difficult conditions at its Red Lake mine and lower grade ore. Late Wednesday, the company reported a first-quarter profit of US$479 million, or 51 cents per diluted share, down from $651 million, or 81 cents per diluted share, a year ago. Its stock dropped six per cent, or $2.44, to $38.05.

Copper prices headed lower, down 0.3 of a cent to US$3.765 a pound.

In Canadian earnings news, Shoppers Drug Mart Corp. (TSX:SC) reported first-quarter net earnings of $119 million, or 56 cents per share — missing analysts estimates by a penny and besting the $118 million, or 54 cents per share, earned during the quarter last year. Sales were $2.4 billion in the quarter, up two per cent. Shares dipped 25 cents to $42.10.

Imperial Oil Ltd. (TSX:IMO) said its first-quarter profit was up 30 per cent from the same time last year, rising slightly above $1 billion, or $1.19 per share and coming in ahead of analyst expectations. Shares fell 11 cents to $45.15.

Husky Energy Inc. (TSX:HSE) posted earnings of $591 million, or 60 cents per diluted share, as it reported that higher oil production and prices offset tighter refining margins and lower natural gas prices. The results compared with $626 million, or 70 cents, in the prior-year period when the company recorded an after-tax gain of $143 million on the sale of non-core assets. Its shares rose 63 cents, or 2.59 per cent, to $24.93.

Power producer TransAlta Corp. (TSX:TA) posted quarterly earnings of $89 million or 40 cents per share as it was hit by lower prices and an increase in maintenance activities. The results compared with a profit of $204 million or 92 cents per share a year ago. TransAlta stock was down 35 cents at $16.37.

Forest products company Tembec Inc. (TSX:TMB) widely missed analyst forecasts with a $14-million, or 14 cents per share, loss on a 10 per cent drop in sales in the second quarter to $407 million. Its shares were down 10.3 per cent or 36 cents at $3.12.

Canfor Corp. (TSX:CFP) said a soft quarter for its pulp and paper business pulled first-quarter results to a loss of $16.2 million or 11 cents per share for the quarter compared with a profit of $7 million or five cents per share per share a year ago. Revenue totalled $607.6 million, down from $624 million. Company shares rose 24 cents to $10.67.

In Europe, the market responded cautiously to evidence of a sharp slowdown in the economy of the 17 countries that use the euro.

Adding to the gloom was a survey from the European Commission showing economic sentiment in the eurozone was down more than expected. Its main indicator fell from 94.5 to 92.8, much worse than consensus expectations for a more modest decline to 94.

In recent weeks, there has been an increasing backlash against the austerity drive in many European countries amid worries that governments will be unable to deliver their debt-reduction plans as their economies tank.