TORONTO - Losses in the financial sector pushed the Toronto stock market lower late in the morning.
New York indexes moved higher with investors relieved about plans from two of the biggest U.S. banks to strengthen their balance sheets.
Toronto's S&P/TSX composite index, up over 100 points in early trading, declined 49 points to 8,830.6 as the market was also pressured by energy stocks as oil prices reversed direction to head lower.
The TSX Venture Exchange advanced 8.89 points to 853.19 while the Canadian dollar snapped a five-day losing streak rising 0.35 cent to 80.26 cents US. The loonie had fallen more than four cents on a stronger greenback and tumbling oil prices.
New York's Dow Jones industrial average gained 51 points to 8,263.5 and while investors felt better about the shape of two of the biggest banks, it wasn't reflected in their share prices.
Bank of America shares were off 62 cents to US$7.70 after the Bush administration reached an agreement to provide it with an additional US$20 billion worth of fresh capital to help it absorb losses at Merrill Lynch, which the company acquired Jan. 1.
And Citigroup says it is splitting up into two businesses.
One business, Citicorp, will do traditional banking, and the other, Citi Holdings, will hold the company's riskier assets.
The bank's move reveals its growing focus on back-to-basics lending and deposit-gathering, and dismantles the "financial supermarket" created a decade ago.
The move by Citi follows a deal earlier in the week to sell control of its brokerage business to Morgan Stanley as it looks to streamline operations and shed assets.
At the same time, both banks reported steep quarterly losses.
Escalating credit losses drove Bank of America to a loss of US$2.39 billion and the firm slashed its quarterly dividend to a penny.
Citigroup posted a fourth-quarter net loss of US$8.29 billion, or $1.72 per share.
Analysts expected a loss of $1.31 per share and its shares rose three cents to US$3.86.
The Nasdaq composite index moved up 5.37 points to 1,517.21 with investors also pleased with results at chip maker Intel Corp., even as the company's fourth-quarter profit plunged 90 per cent to US$234 million -- but the results still met subdued expectations. Sales slumped 23 per cent, in line with Intel's previous guidance, as Intel was hurt by poor PC sales that have crimped demand for microprocessors but its shares gained 39 cents to US$13.68.
"The orders are drying up -- that's what I'm seeing," said Adrian Mastracci, portfolio manager at KCM Wealth Management in Vancouver..
"I looked at some of the numbers from Intel, Alcoa, Tiffany's -- they're all reporting revenue drops year over year of over 20 per cent. That's a staggering drop."
The S&P 500 index added 2.8 points to 846.55 as investors also took in tame inflation data from the U.S.
A record plunge in gasoline prices pushed overall consumer prices down for the third straight month in December, as consumer prices dropped by 0.7 per cent.
For the year, consumer prices edged up by just 0.1 per cent, the smallest annual change since consumer prices actually fell by 0.7 per cent in 1954.
And U.S. industrial production plunged by two per cent last month, double the amount analysts expected and capping the worst year for manufacturers since 2001.
Toronto's financial sector slipped 2.23 per cent with TD Bank (TSX:TD) down $1.55 to $42.50 and Scotiabank (TSX:BNS) declined $1.42 to $29.94.
The energy sector was flat as oil prices headed higher after almost touching the US$33 level Thursday. The February crude contract on the New York Mercantile Exchange dropped 91 cents to US$34.49 a barrel and EnCana Corp. (TSX:ECA) fell 59 cents to $56.11 while Petro-Canada (TSX:PCA) improved 51 cents to $29.64.
The base metals sector was one of the few positive sectors, up 1.5 per cent with March copper ahead 6.15 cents to US$1.515 a pound as Sherritt International (TSX:S) moved ahead eight cents to $3.65 and FNX Mining Co. (TSX:FM) advanced 21 cents to $3.66.
Agrium Inc. (TSX:AGU) shares were $1.42 higher to $41.32 after it said it expects to take a US$115-million writedown on its retail operations due to "unprecedented volatility" in global markets in yet another blow to the fertilizer industry.
Shares in Onex Corp. (TSX:OCX) were down 40 cents to $18.35 after it said it has raised US$3 billion of capital for its private equity fund, Onex Partners III LP, but also warned it has temporarily halved its commitment to the fund due to the uncertain investing environment.
The conglomerate will now commit $500 million to the fund, down from $1 billion on "a temporary basis," it said in a release.
New Flyer Industries Inc. (TSX:NFI.UN) units were 14 cents higher to $9.02 after the Winnipeg-based manufacturer of heavy-duty transit buses said it ended 2008 with an order backlog of US$4.1 billion, up from $2.8 billion at the start of the year.
Overseas, Japan's Nikkei stock average rose 2.6 per cent while Hong Kong's Hang Seng edged 0.1 per cent higher.
Britain's FTSE 100 gained 1.55 per cent, Germany's DAX rose 1.4 per cent and the Paris CAC 40 index rose 0.55 per cent.
