TSX slightly higher on China growth worries, escalating Russia/Ukraine tensions

TORONTO - The Toronto stock market closed with a small gain Tuesday amid concerns about China's growth and worsening tensions between Ukraine and Russia.

The S&P/TSX composite index climbed 19.49 points to 14,303.92.

The Canadian dollar was down 0.2 of a cent to 91.1 cents US a day ahead of the Bank of Canada's latest interest rate announcement. It is universally expected that the bank won't hike its key rate from one per cent, where it has been since September, 2010.

New York indexes closed higher at the end of a volatile session as the Dow Jones industrials gained 89.32 points to 16,262.56, the Nasdaq was 11.47 points higher at 4,034.16 and the S&P 500 index was ahead 12.37 points at 1,842.98.

Worries about the Ukraine crisis deepened after the government's first military action since acting President Oleksandr Turchynov announced an “anti-terrorist operation” against separatists who have seized control of numerous buildings in the east of the country. The government said troops restored control over a small airport in eastern Ukraine that had been occupied by pro-Russian militiamen.

Concerns about China also weighed as data showed a tightening of credit growth. Money supply growth was up just 12.1 per cent year over year in March, the slowest pace in 17 years.

And that slowing in credit growth raised fresh worries about economic growth in the world’s second-biggest economy. There are worries that gross domestic product growth may fall below seven per cent in the current year, a full 0.5 of a percentage point below the government's target. Official growth figures for China will be released Wednesday.

"Clearly the growth is slowing, officially guiding at 7.5 per cent, but the leadership has said the growth will not come at the expense of reform," said John Stephenson, portfolio manager at First Asset Funds.

"So, to the extent that reform does occur, and it’s badly needed, that would be a good thing. So, China is making the right moves, but so much is predicated on them getting things exactly right."

Markets found some buoyancy from well-received earnings reports.

Coca-Cola beat expectations as the beverage giant said adjusted per-share earnings fell to 44 cents while net operating revenues fell to $10.58 billion. Analysts polled by FactSet had expected earnings of 44 cents on revenue of $10.55 billion and Coca-Cola shares rose 3.74 per cent.

Also, drug company Johnson&Johnson reported earnings per share of $1.54, seven cents better than analyst forecasts while revenue of $18.115 billion beat forecasts of $17.996 billion. It shares ran up 2.12 per cent.

Tech stocks led TSX advancers, up 0.58 per cent.

In the U.S., Intel and Yahoo reported earnings after the close.

Intel ran up 2.73 per cent in after-hours trading as earnings per share came in at 38 cents, a penny more than expectations. Revenue grew to US$12.8 billion from $12.6 billion because of solid demand for tablet processors and its data centre services, although it narrowly missed expectations of $12.81 billion.

A survey by FactSet says analysts were expecting earnings of 37 cents per share on revenue of $12.8 billion.

And Yahoo's earnings per share ex-items were 38 cents, a penny higher than analyst forecasts and its shares edged up 0.4 per cent in after-hours trading. Net earnings were US$312 million, or 29 cents per share compared with $390 million or 35 cents per share a year earlier.

The results highlighted the contrasting performances of Yahoo's investment portfolio and the company's business of running ad-supported online services. Yahoo Inc. is making most of its money from its stakes in two Asian Internet companies — China's Alibaba Group and Yahoo Japan.

The rising U.S. dollar helped depress commodity prices. A stronger greenback makes it more expensive for holders of other currencies to buy oil and metals which are dollar-denominated.

May crude on the New York Mercantile Exchange fell 30 cents to US$103.75 a barrel, but the energy sector was ahead 0.15 per cent.

The gold sector was the major decliner, down 2.15 per cent as June bullion fell $27.20 to US$1,300.30 an ounce.

The base metals sector was down 1.3 per cent as May copper fell six cents to US$2.98 a pound.