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TSX slips after Fed, banks lead decline

Reuters
A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014. REUTERS/Mark Blinch

By Alastair Sharp

TORONTO (Reuters) - Canada's main stock index slipped on Wednesday as the country's biggest banks retreated, after the U.S. Federal Reserve moved cautiously towards rate hikes later this year.

The central bank of Canada's main trading partner said the U.S. economy is growing moderately as it trimmed its growth forecasts and stretched out its timeline for higher borrowing costs.

Toronto-Dominion Bank (Toronto:TD.TO - News) led the decliners, down 0.8 percent at C$53.86, while Royal Bank of Canada (Toronto:RY.TO - News) slipped 0.6 percent to C$78.05 and Bank of Nova Scotia (Toronto:BNS.TO - News) declined 0.8 percent to C$65.28. The heavily-weighted financial group fell 0.6 percent.

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The biggest pushback came from the materials group, which gained 0.8 percent overall, as miners benefited from a higher gold price. [GOL/] Barrick Gold Corp (Toronto:ABX.TO - News) rose 2.6 percent to C$14.13.

Other major gainers included Canadian National Railway (Toronto:CNR.TO - News), which rose 0.8 percent to C$73.95.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) slipped 20.07 points, or 0.14 percent, to 14,732.98. Eight of the index's 10 main groups fell, while the energy sector was barely positive.

Investors are reluctant to return to energy names as crude prices struggle to move higher following last year's swoon.

"I do not think we can predict when and if there will be a bottom, but it does certainly feel like the world is awash with oil," said Diana Avigdor, a portfolio manager and head of trading at Barometer Capital Management.

Crude prices, which rallied sharply earlier in the session, pared much of their gains after data showed U.S. gasoline inventories rose unexpectedly and stocks at Cushing also rose. [O/R]

The TSX has struggled to hold on to gains since peaking at 2015 highs in mid-April.

"The Canadian market has meandered lower for the past month and has really returned very poor results year-to-date, but that was then, things can change quite rapidly," Barry Schwartz, vice president and portfolio manager at Baskin Financial Services.

(Additional reporting by Solarina Ho and Leah Schnurr; Editing by W Simon and Diane Craft)