08/28/2012 08:28 EDT | Updated 10/28/2012 05:12 EDT

TSX lower amid solid bank earnings, higher oil prices, positive housing data

TORONTO - The Toronto stock market closed lower Tuesday as buyers were discouraged by data showing falling American consumer confidence while waiting for hints of further stimulus from a speech by the chairman of the U.S. Federal Reserve on Friday.

However, the financial sector supplied some lift after Bank of Montreal (TSX:BMO) and Scotiabank (TSX:BNS) released quarterly earnings that beat expectations.

The S&P/TSX composite index slipped 38.92 points to 12,009.9 amid falling energy and mining stocks while the TSX Venture Exchange dipped 4.94 points to 1,241.88.

BMO shares gained 23 cents to $57.93 as the bank posted net income of $970 million or $1.42 per share, up 37 per cent from a year ago. On an adjusted basis, the bank’s earnings were $1.49 per share, beating analyst expectations by 10 cents. BMO also increased its dividend by two cents to 72 cents a share.

But Scotiabank’s shares lost early momentum to move down four cents to $52.90 even as its quarterly net profits grew by 57 per cent to $2.05 billion or $1.69 a share, while the bank's core EPS was $1.22 per share, three cents better than expectations. The bank also said it was also raising its quarterly dividend by two cents, to 57 cents per share.

The Scotiabank results were helped by an after-tax gain of $614 million from the sale of its headquarters in Toronto’s financial district.

The Canadian dollar rose 0.31 of a cent to 101.24 cents US.

New York indexes were mainly listless as a drop in consumer confidence competed with positive news from the housing sector.

The Dow Jones industrial average dropped 21.68 points to 13,102.99 as the Conference Board said that its Consumer Confidence Index fell to 60.6 from a revised 65.4 in July. Economists had expected a reading of 66. The index now stands at the lowest point since November 2011 when the reading was at 55.2.

The indicator is widely watched because consumer spending, including major purchases like health care, accounts for 70 per cent of U.S. economic activity.

The Nasdaq composite index was 3.95 points higher at 3,077.14 and the S&P 500 index was down 1.14 points at 1,409.3.

The news was better on the housing front as Standard & Poor’s/Case-Shiller home price index showed prices rose in June in all of the 20 American cities tracked. The measure of national prices rose 2.3 per cent in June from May, while home prices jumped nearly seven per cent in the April-June quarter from the previous quarter.

Traders also looked ahead to a speech Friday by U.S. Federal Reserve chairman Ben Bernanke at the central bank's annual retreat at Jackson Hole, Wyo. Markets have registered solid gains in August, in large measure from expectations that global central banks will step in with further stimulus measures to maintain the momentum of the economic revival and preserve the eurozone monetary union.

But some analysts caution Bernanke is unlikely to tip his hand ahead of a slew of key economic data next week, particularly the non-farm payrolls report for August. This past month has seen a string of positive economic data, starting with better-than-expected job creation in July, rising retail sales and positive housing reports.

"We do think he will take the opportunity to reiterate that the Fed is data driven, they’re looking at the data and the data does not suggest a panacea at this point," said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.

"It simply suggests an economy that for some time now has been growing slowly, it will continue to grow slowly and the Fed will be there where necessary," he said. "But we don’t think that comes in the form of some miraculous action from Jackson Hole."

Meanwhile, European Central Bank head Mario Draghi has called off his trip to the Fed conference, due to a heavy workload as top ECB officials shape their plans to intervene in bond markets and lower borrowing costs for indebted governments.

The ECB plan remains subject to debate ahead of the bank’s monthly meeting on Sept. 6, when it is expected to announce more details. Germany’s central bank is still opposed to the plan to buy government bonds.

On the TSX, the financial sector gained about 0.2 per cent with Royal Bank (TSX:RY), which reports Thursday, ahead 26 cents to $54.17. CIBC (TSX:CM), TD Bank (TSX:TD), National Bank (TSX:NA) also post earnings results Thursday.

All other sectors declined with the base metals sector the biggest loser, down almost one per cent while September copper was off a penny at US$3.46 a pound. Teck Resources (TSX:TCK.B) declined 39 cents to C$28.54.

The energy sector was down 0.52 per cent and the October crude contract on the New York Mercantile Exchange rose 86 cents to US$96.33 a barrel as traders waited to see how much — and for how long — hurricane Isaac’s powerful winds and driving rains will affect oil production and refinery operations in the Gulf coast region.

Prices also rose following an intense fire at the Amuay refinery in western Venezuela. Imperial Oil (TSX:IMO) dropped 35 cents to C$45.96.

The gold sector was down about 0.3 per cent as December gold backed off $5.90 to US$1,669.70 an ounce. Kinross Gold Corp. (TSX:K) faded nine cents to C$8.68.