TSX steady as miners, Valeant climb; financials slip

John Tilak
Reuters
Sign shows TSX information in Toronto
A sign shows TSX information in Toronto September 15, 2008. REUTERS/Mark Blinch

By John Tilak

TORONTO (Reuters) - Canada's main stock index was little changed on Tuesday as an advance in the materials sector and gains in Valeant Pharmaceuticals International Inc helped offset weakness in some financial shares.

Valeant shares jumped 3.7 percent after the drugmaker said that when it announces a sweetened takeover offer for Allergan Inc on May 28, it will not be the all-cash bid that had been expected.

Opening after a long weekend in Canada, the Toronto stock market's small gain follows declines in the previous three sessions. It is up 6.6 percent so far this year.

Some investors said that markets have been ignoring concerns about the pace of economic and earnings growth, raising worries about extended stock valuations.

"The markets assumed all of the positives and didn't incorporate any of the negatives," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates, noting that investors are now factoring in geopolitical uncertainty, sluggish global growth and weaker-than-expected corporate revenue growth.

"There is very little room for valuation expansion and there's potential for a pullback in the equity markets," he added. "My basic view is that the markets probably won't end the year much higher than (where) they started."

The Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> closed up 10.45 points, or 0.07 percent, at 14,525.19.

Kumar expects a correction in the Canadian benchmark midway through the year and a recovery towards the end of the year.

Six of the 10 main sectors on the index were higher on Tuesday.

The materials sector, which includes mining stocks, rose 0.4 percent, helped by gains in some commodity prices. Barrick Gold Corp added 0.5 percent to C$18.15, and Potash Corp climbed 1.1 percent to C$40.58.

Shares of energy producers were up slightly despite a decline in the price of U.S. crude oil. Encana Corp rose 0.9 percent to C$24.83.

But financials, the index's most heavily weighted sector, declined. Sun Life Financial Inc slipped 0.7 percent to C$36.73, and Bank of Montreal lost 0.3 percent to C$74.55.

Valeant climbed to C$142.76, helping push the index's healthcare sector up 2.4 percent. The stock had the biggest positive influence on the index.

(Editing by Peter Galloway)