TSX shakes off early losses at midday

TORONTO — The Toronto stock market shook off early declines to register a respectable advance Wednesday amid higher oil and metal prices and concerns about potential fallout from the worsening debt crisis in Europe.The resource-intensive S&P/TSX composite index was up 44.11 points to 11,541.41 as traders focused on Spain and Italy and the higher borrowing costs both countries are facing. The TSX Venture Exchange lost 10.13 points to 1,259.57.The Canadian dollar ticked 0.16 of a cent higher to 97.56 cents US.U.S. markets were lower as data for May showed retail sales dropped by 0.2%. But most of the weakness was focused in a drop in gasoline prices.The Dow Jones industrials were down 21.34 points to 12,552.46, the Nasdaq composite index added 2.31 points to 2,845.38 and the S&P 500 index lost 1.86 points to 1,322.32.The TSX registered a 96 point gain Tuesday on hopes that the U.S. Federal Reserve was about to step in with a new round of stimulus measures. Charles Evans, president of the Fed’s Chicago bank, said he supported action to produce faster job growth.Buyers have been moving cautiously to buy up stocks that were beaten down in a string of sharp declines last month that left the TSX more than 10% below its 2012 highs at the end of February.The Fed official’s remarks helped mask concerns about the effectiveness of a Spanish bank rescue announced over the weekend and a downgrade of Spain’s banks by ratings agency Fitch.Traders worry that the C100 billion euros being made available to Spain to aid its banks will just add to the government’s already considerable debts and perhaps force it to seek its own sovereign bailout. “It has been nothing from day one out of Europe where it hasn’t been a reactionary response,” said Chris Kuflik, investment adviser with ScotiaMcLeod in Montreal, adding that it is mildly encouraging the eurozone is taking some necessary steps.“They have to solve the problem once and for all and it’s going to take some hard decisions. They have to, at some point, provide some sort of a guarantee, like what the U.S. did where they upped the limits of depositor guarantee so that there wasn’t money flooding out of the banks.”The lack of confidence has been expressed in bond markets where Spain has been forced to pay higher yields to attract buyers for its debt. The yield on Spain’s benchmark 10-year bond had hit a euro-era high of 6.72 per cent but dropped slightly Wednesday.Spanish contagion has spread to other heavily-indebted countries. Italy paid 3.972% interest rates — up from 2.34% last month — to sell $6.5-billion in 12-month paper. The bond auction enjoyed strong demand. The sale was a warm-up for Thursday’s weightier longer-term paper auction.The debt crisis is not just rattling financial markets, but also affecting households and businesses by creating uncertainty over the future of the economy. The latest report from Eurostat, the EU statistics agency, showed industrial production in April among the 17 countries that use the euro, slipped 0.8 per cent. Analysts noted that even that poor showing is worse than it seems because a cold spring pushed up energy demand.Investors are nervously awaiting Greek elections on Sunday when a party that’s threatening to renege on the country’s bailout terms could come away the big winner. That might force Greece out of the eurozone, causing upheaval in currency markets.The base metals group shed early losses and moved up two per cent as July copper edged a penny higher to US$3.34 a pound. Teck Resources (TSX:TCK.B) rose 68 cents to $32.49 and First Quantum Minerals (TSX:FM) improved by 72 cents to $18.23.The financial sector gained about 1.1% with TD Bank (TSX:TD) ahead $1 to $79.10 while Manulife Financial (TSX:MFC) advanced 23 cents to $11.03.The gold sector was rose about one per cent as bullion prices gained $8.20 to US$1,622 an ounce. Goldcorp Inc. (TSX:G) gained $1.07 to $41.53 while Iamgold (TSX:IMG) rose 25 cents to $13.05.The energy sector was flat as the July crude contract on the New York Mercantile Exchange moved turned positive, up 26 cents to US$83.58 barrel. Imperial Oil (TSX:IMO) gained 48 cents to $42.75.Oil and gas producer Enerplus Corp. (TSX:ERF) cut its dividend in half on Tuesday to a monthly payment of nine cents per share from 18 cents amid weaker oil and natural gas prices. Its stock gave back 30 cents to $13.22.European bourses were off the worst levels of the session with London’s FTSE 100 up 0.06%, Frankfurt’s DAX down 0.01% and the Paris CAC 40 down 0.8%.On the earnings front, discount retailer Dollarama Inc. (TSX:DOL) said its first-quarter profit rose 40% to $42.6-million or 56 cents a share, which beat estimates by six cents.The Montreal-based company’s revenue for the 13 weeks ended April 29 was just under $398-million, up 15% from the comparable period last year and its shares ran ahead $4.12 to $60.99.Elsewhere, shares in paper maker Domtar Corp. (TSX:UFS) rose 72 cents to $83.10 as it announced it is selling its hydroelectric assets in the Ottawa and Gatineau, Que.,-area for $45-million. The buyer is Energy Ottawa Inc., the renewable energy subsidiary of Hydro Ottawa Holding Inc. The Canadian Press