TSX slips on U.S. trade worries; Home Capital slumps

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index pulled back on Wednesday from a 2-month high the day before, pressured by a plunge in the shares of Home Capital Group Inc (Toronto:HCG.TO - News) and investor worries about Canada's trade relationship with the United States.

The White House is considering a draft executive order to withdraw the United States from the North American Free Trade Agreement, a trade pact with Canada and Mexico, a senior Trump administration official said.

"I think they're (investors) being a little cautious about Mr Trump and maybe what he is going to do to Canada," said John Kinsey, portfolio manager at Caldwell Securities.

U.S. President Donald Trump has recently ramped up criticism of Canada, saying last week that Ottawa's protection of its dairy industry was "unfair." This week he ordered 20 percent tariffs on imports of Canadian softwood lumber.

Home Capital plunged nearly 65.0 percent to C$5.99 after the alternative lender said it would secure a C$2 billion (credit line to shore up its shrinking balance sheet.

The overall financials group declined 1.3 percent even as the Trump administration proposed slashing business taxes, which could provide a boost to some Canadian banks that have operations in the United States.

Toronto-Dominion Bank (Toronto:TD.TO - News) fell 1.5 percent to C$65.77.

Other influential decliners included Burger King and Tim Horton parent Restaurant Brands International (Toronto:QSR.TO - News), which fell 2.9 percent to C$77.02 despite reporting profit and revenue that beat expectations.

The energy group retreated 1.1 percent even as oil prices rebounded from early losses after U.S. government data showed a larger-than-expected falloff in crude inventories.

U.S. crude oil prices settled 6 cents higher at $49.62 a barrel.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) closed down 95.65 points, or 0.61 percent, at 15,649.54. Five of its 10 main groups ended lower.

Shares of BCE Inc (Toronto:BCE.TO - News) advanced 1.7 percent to C$62.70 after Canada's largest telecommunications company reported a better-than-expected quarterly profit, driven by an increase in net postpaid subscribers.

Teck Resources Ltd (TECKb.TO) advanced 0.5 percent to C$28.97 after it said it will double its dividend payout.

Canadian retail sales fell more than expected in February, dragged down by lower vehicle purchases and cheaper prices for gasoline at the pump, but the decline did not alter expectations for strong economic growth in the first quarter.

(Additional reporting by Alastair Sharp; Editing by Nick Zieminski and David Gregorio)