TSX makes gains for third straight session

TORONTO - The Toronto stock market's gains extended to a third session Thursday as earnings from three of the big banks reminded investors that Canadian financial companies are in far better shape than most of their counterparts in the U.S. and Europe.

"People are relieved," said Jennifer Radman, associate portfolio manager at Caldwell Securities.

"Despite everything that's going on - the banks are still making a lot of money. The market in general has been very short sighted and a lot of the valuations that are out there - it's like society is going to go backwards!"

Energy stocks also gave major support to the TSX as oil prices improved for a third straight day.

New York markets lost ground as financials backed off from early strong gains despite moves to increase aid to struggling banks while health care stocks suffered after the Obama administration's US$3.55 trillion budget plan for 2010 includes cuts to Medicare, the U.S. public health care system for seniors.

Toronto's S&P/TSX composite index rose 254.52 points to 8,186.82. for a gain of 539 points in the last three days.

The Dow Jones industrial average closed down 88.81 points to 7,182.08 .

The Nasdaq composite index lost 33.96 points to 1,391.47 and the S&P 500 shed 12.07 points to 752.83.

The TSX Venture Exchange edged up 7.84 points at 862.81.

The Canadian dollar moved up 0.09 of a cent to 79.8 cents US.

The financial sector had climbed smartly Wednesday after TD Bank (TSX:TD) earnings came in better than expected.

And the group improved a further six per cent Thursday after CIBC (TSX:CM), Royal Bank (TSX:RY) and National Bank (TSX:NA) also delivered earnings reports that were better than what analysts had forecast while leaving dividends untouched.

The Canadian Imperial Bank of Commerce reported a first-quarter profit of $147 million, better than its year-ago loss of $1.46 billion but still reflecting hundreds of millions of dollars of losses from its entanglement in exotic credit instruments in the United States. Its shares gained $2.63 to $45.91.

Royal Bank, Canada's biggest bank said its first-quarter profits fell to $1.05 billion, down 15 per cent from the previous year's $1.25 billion and its shares gained $1.91 to $31.90.

And National Bank of Canada (TSX:NA) shares surged $3.34 to $37.69 as it reported that costs associated with its involvement in asset-backed commercial paper dragged down its first-quarter profit by more than 70 per cent to $69 million.

Excluding the ABCP items, and a gain last year from the sale of a subsidiary, National Bank's net income for the first quarter was $253 million.

"I think the greater issue going forward is going to be credit cards, increasing loan losses for that," added Radman.

"But the banks are expecting that and they were looking for this quarter to be the strongest of the year."

The Federal Deposit Insurance Corp. said Thursday that U.S. banks lost US$26.2 billion in the last three months of 2008, the first quarterly deficit in 18 years, as the housing and credit crises escalated.

U.S. financial stocks had earlier ran up sharply on a report that President Barack Obama's budget proposal outlines the possibility of spending up to US$750 billion more for additional financial industry rescue efforts on top of the $700 billion that Congress has already authorized.

But they backed off somewhat after the White House said the money was for a contingency fund and that it didn't plan to immediately ask Congress to add to the government's existing rescue program.

American markets were also pressured by falling health care stocks after the Obama administration's US$3.55 trillion budget plan for 2010 includes cuts to Medicare, and private health insurance plans serving Medicare seniors would take the biggest hit. WellPoint Inc. fell $3.78 or 9.65 per cent, to $335.34.

Meanwhile, GM posted a $9.6-billion fourth-quarter loss and said it needs up to $30 billion in federal loans to stay out of Chapter 11 bankruptcy protection and its shares were down 21 cents to $2.34.

Elsewhere in the financial sector, JPMorgan Chase & Co. shares ran up $ to US$23.63 after it said Thursday it will eliminate about 12,000 jobs as it folds in the operations of Washington Mutual Inc., which it acquired at the end of September. Its shares gained $1.32 to US$23.05.

The Toronto market was also supported by a 4.4 per cent rise in the energy sector as the April crude contract in New York ran up $2.72 to US$45.22 a barrel. Crude gained more than US$2.50 Wednesday after data showed a smaller than expected rise in U.S. crude inventories last week, while gasoline inventories fell and production rose.

EnCana Corp. (TSX:ECA) gained 78 cents to C$48.88 and Petro-Canada (TSX:PCA) rose $1.01 to C$28.02.

The gold sector turned positive during the afternoon despite falling bullion prices. The April gold contract in New York declined $23.60 to US$942.60 an ounce and Goldcorp (TSX:G) gained $1.42 to $36.41.

Investors also took in further indications of how the recession is hammering media companies.

Torstar Corp. (TSX:TS.B), the publisher of the Toronto Star and other papers, is warning that further restructuring and job cuts are on the way after the company posted a $211.2 million loss for the fourth quarter. Its shares fell 34 cents to $6.05.

Meanwhile CHUM Radio, a division of CTV (TSX:BCE) cut 40 jobs across the country, effective immediately.