TSX slips on day and week; eyes bank earns, Fed

By Alastair Sharp

TORONTO (Reuters) - Canada's main stock index closed a fraction lower on Friday as investors awaited bank earnings and more talk from the U.S. Federal Reserve next week, giving the TSX its third straight directionless day.

Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) closed down 8.22 points, or 0.06 percent, at 14,687.46. It lost 0.4 percent over the week in low-volume trade as a recent pullback lost momentum and investors looked ahead.

"It's Friday. We're just taking a little bit of a breather," said Kevin Headland, senior investment strategist at Manulife Investments.

"The last couple of days, and today, are a breather post-Fed minutes, post the end of U.S. earnings season, perhaps adjusting, looking forward to Canadian earnings," he added.

Canada's biggest banks report third-quarter earnings starting with Bank of Montreal (Toronto:BMO.TO - News) next Tuesday followed by Royal Bank of Canada (Toronto:RY.TO - News), Toronto-Dominion Bank (Toronto:TD.TO - News) and Canadian Imperial Bank of Commerce (Toronto:CM.TO - News) later in the week. Bank of Nova-Scotia (Toronto:BNS.TO - News) follows the week after.

The heavyweight banking sector rose 0.5 percent, while energy stocks fell 0.4 percent as U.S. crude posted its biggest weekly gain since March in a rally analysts cautioned was not justified by fundamentals.

Gold fell more than 1 percent, hurting the TSX's hefty gold mining component.

The most influential weights on the index included Barrick Gold Corp (Toronto:ABX.TO - News), which fell 1.5 percent to C$26.48.

The materials group, which includes precious and base metals miners and fertilizer companies, also fell 1.5 percent.

Diversified miner Teck Resources Ltd (TCKb.TO) declined 3.7 percent to C$20.32. Silver Wheaton Corp (Toronto:SLW.TO - News) fell 3.8 percent to C$37.61 and First Majestic Silver Corp (Toronto:FR.TO - News) slumped 6.9 percent to C$19.42.

Spot silver fell 2.4 percent to $19.241 an ounce.

Bullion and other precious metals are sensitive to higher interest rates which lift the opportunity cost of holding non-yielding assets, while boosting the U.S. dollar in which they are priced.

"I think all markets, both Canada, U.S., and even globally have one eye at least on the Federal Reserve trying to ascertain some kind of information about what they're going to be doing," Headland said.

Markets anticipate more direction at next week's annual meeting of central bankers from around the world in Jackson Hole, Wyoming, a venue the Fed often uses to telegraph policy plans.

"I think September is most likely on hold, but any indication that December is perhaps more than a 50:50 chance of a rate hike ... there's going to be a lot of attention paid," Headland added.

(Reporting by Alastair Sharp Editing by W Simon and James Dalgleish)