TORONTO - The Toronto stock market closed in negative territory Thursday with traders largely avoiding risk in the wake of news that a Malaysian airliner with about 300 people on board crashed in Ukraine.
The S&P/TSX composite index declined 21.86 points to 15,204.48.
The market had been positive for much of the morning in the wake of a strong earnings report from Canadian Pacific Railway (TSX:CP).
Losses were slight on the Toronto market as gold stocks ran up sharply alongside bullion prices. The gold sector gained 2.45 per cent as the August bullion contract in New York moved up $17.10 to US$1,316.90 an ounce.
An adviser to Ukraineâ€™s interior minister said the plane was flying at an altitude of 10,000 metres when it was hit by a missile, and Malaysian Airlines tweeted that it lost contact with one of its flights over Ukrainian airspace.
The region has seen severe fighting between Ukrainian forces and pro-Russia separatist rebels in recent days.
The flight to safety pushed the Canadian dollar down 0.11 of a cent to 92.95 cents US.
Traders were already cautious after the U.S. announced broader sanctions against Russia, targeting two major energy companies, a pair of powerful financial institutions, eight weapons firms and four individuals. The increased U.S. economic pressure is designed to end the insurgency in eastern Ukraine that is widely believed to be backed by the Kremlin.
Jitters also increased late in the session after the Israeli military said it had launched a ground operation in the Gaza Strip.
U.S. markets registered sharp losses with the Dow Jones industrials down 161.39 points at 16,976.81. The Nasdaq fell 62.52 points to 4,363.45, while the S&P 500 index shed 23.45 points to 1,958.12.
Canadian Pacific posted second-quarter net income of $371 million, or $2.11 per diluted share, up 48 per cent from a year ago and beating estimates by a penny. Its shares ran up $4.50 to $202.33.
CP's results also gave a lift to rival Canadian National Railways (TSX:CNR). CN shares gained 32 cents to $71.77 ahead of the release of its earnings on Monday.
"Both rail companies are benefiting from volume growth across most of the markets but weâ€™re also seeing incredible strength in the grain side of the business and growth in shipments of oil by rail," said Colum McKinley, vice-president, Canadian equities, CIBC Asset Management.
"We think that the grain-based business and the crude oil shipment business are going to continue to be strong throughout the reminder of the year and into the first half of next year and that ... should contribute to continued strength in their earnings."
In the U.S., Microsoft plans to eliminate up to 18,000 jobs over the next year as it works on integrating the Nokia devices business it bought in April. Microsoft anticipates charges of $1.1 billion to $1.6 billion over the next four quarters. Its stock gained one per cent to $44.53.
Loblaw Companies Ltd. (TSX:L) says executive chairman Galen G. Weston will take on the additional role of president of the retailer as part of broader changes in its management structure. He replaces Vicente Trius effective immediately. Loblaw shares were down 32 cents to $48.96.
Most TSX sectors turned lower with the energy sector off 1.2 per cent as oil prices continued to benefit from data released Wednesday showing a much larger than expected drawdown of U.S. inventories last week. The August contract on the New York Mercantile Exchange was up $1.99 to US$103.19 a barrel.
The metals and mining sector was one per cent lower even as September copper in New York rose one cent to US$3.22 a pound.
Note to readers: CORRECTS to remove reference to Weston as formerly executive chairman