Business torrents

Pressure on financial shares prodded the Toronto stock market's main index slightly lower Thursday morning.

American markets were down more steeply, after Federal Reserve chairman Ben Bernanke told the Senate banking committee that business prospects have worsened. That took some of the shine from big stock-market advances Wednesday which had followed a better than expected reading on U.S. retail sales.

Toronto's S&P/TSX composite index declined 15.97 points to 13,266.33 near midday, as traders digested Wednesday's 195-point surge.

The market found support from the energy sector on higher oil prices and solid earnings.

The TSX Venture Exchange added 8.25 points to 2,569.56.

The Canadian dollar was up 0.26 of a cent to 100.56 cents US, recovering earlier losses after Statistics Canada reported that the merchandise trade surplus shrank to $2.4 billion in December, its lowest level in nine years, as exports declined and imports edged up.

In New York, the Dow Jones industrials moved 96.65 points lower to 12,455.59 after Bernanke said the housing slump and credit crisis have greatly strained the economy. He noted that hiring has slowed and people are likely to tighten their belts further.

He also signalled that the U.S. central bank is ready to keep lowering interest rates, which it has eased by 1.25 percentage points since the start of the year.

"We've seen the market recover somewhat, we've seen some economic news which is not looking as completely bad as everything seemed to be a month ago," said Gavin Graham, director of investments at Guardian Group of Funds.

"But what Bernanke did signal was I think their willingness to cut rates further, and that they will be very data-dependent."

The Nasdaq composite index lost 22.26 points to 2,351.67 and the S&P 500 index was off 10.69 at 1,356.52.

Economic gloom deepened as the U.S. National Association of Realtors said sales of existing homes fell in 45 states during the October-December quarter, and prices fell in over half of the 150 cities surveyed, including 16 with double-digit percentage drops.

On the TSX, the energy sector rose 1.15 per cent amid strong earnings and higher crude prices.

Shares in EnCana Corp paydayloans. (TSX: ECA) were $1.07 higher to $71.07 after the company doubled its quarterly dividend to 40 cents a share as fourth-quarter profit rose 63 per cent to US$1.08 billion.

Nexen Inc. (TSX: NXY) said its fourth-quarter earnings soared to $194 million from $77 million, and full-year profit topped $1 billion. Its shares were up 69 cents to $29.96.

The March crude oil contract on the New York Mercantile Exchange rose $2.05 to US$95.32 a barrel.

The TSX financial sector was down one per cent, with Sun Life Financial Inc. (TSX: SLF) down $1.42 to $47.74. The company raised its dividend while reporting its best-ever annual results, but business flagged in the fourth quarter amid financial-market unease. Quarterly net income was $555 million or 97 cents a share, missing analyst estimates of $1.03 a share.

Manulife Financial Corp. (TSX: MFC) moved 42 cents lower to $36.92 after a fourth-quarter profit of $1.14 billion, up four per cent from year ago.

Casting a pall over the global financial sector was UBS AG, Switzerland's largest bank. It had a fourth-quarter loss of US$11.28 billion, besieged like other international banks by investments in U.S. subprime mortgages. UBS said 2008 will be "another difficult year."

In other earnings news, Loblaw parent George Weston Ltd. (TSX: WN) reported a profit from continuing operations of $151 million, reversing a year-earlier loss of $428 million. Its shares declined 24 cents to $50.16.

Flight simulator maker CAE Inc. (TSX: CAE) reported quarterly earnings rose 33 per cent to $39.5 million. Its shares advanced 53 cents to $12.63.

Overseas, Tokyo's Nikkei 225 index surged nearly 560 points, or 4.3 per cent, to close at 13,626.5, its biggest percentage gain since March 2002. Hong Kong's benchmark Hang Seng index jumped 3.7 per cent to 24,021.7.

Britain's FTSE 100 rose 13.3 points to 5,893.4, Germany's DAX index was up 38.84 to 7,012.51 and France's CAC-40 gained 28.09 to 4,883.49.

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