North American markets digest uncertainty over Cyprus bank account tax

TORONTO – North American markets tried Tuesday to shed concerns that debt troubles in Europe could worsen as Cyprus grapples with financial stability.

The small Mediterranean island became the centre of attention with traders this week, as lawmakers of the country rejected a draft bill that would have seized part of residents’ bank deposits in order to qualify for an international bailout.

European officials have said that without a bailout, the country’s main banks will collapse and the country could end up having to leave Europe’s joint currency. The instability was compounded by reports that the country’s finance minister Michalis Sarris had resigned from his position, though he later said that was untrue.

But the uncertainty had already erased any gains made earlier in the session on both sides of the border.

Toronto’s S&P/TSX composite index decreased 7.89 points to 12,773.87, while the TSX Venture Exchange slid 5.27 points to 1,106.51.

The Canadian dollar was down 0.45 of a cent at 97.37 cents US.

On Wall Street stocks were mixed as the Dow Jones industrials made a late-session climb to end the day up 3.76 points to 14,455.82.

The Nasdaq backed off 8.49 points to 3,229.10 while the S&P 500 index was down 3.76 points to 1,548.34.

Cyprus’ troubles translated to concerns about eurozone oil demand with the April crude contract on the New York Mercantile Exchange slipping $1.58 to settle at US$92.16 a barrel.

Gold stocks were ahead with April bullion moving up $6.70 to US$1,611.30 an ounce, while May copper fell 2.3 cents to US$3.406 a pound.

The consumer discretionary index led the TSX, up 0.8 per cent, after Rona Inc. (TSX:RON) hired Robert Sawyer, a senior executive from the Metro grocery business, to be its next president and chief executive starting next month. The home renovation company’s shares were up four per cent, or 42 cents, to $10.98.

In U.S. economic data, the Commerce Department reported that construction started on homes in February at the second-fastest pace in 4 1/2 years. Builders broke ground on new homes last month at a seasonally adjusted annual rate of 917,000, up from 910,000 in January.

Statistics Canada reported that wholesale sales rose by 0.3 per cent in January to $49 billion, mainly due to higher sales in computer and communications equipment and supplies. In volume terms, wholesale sales were up 0.5 per cent for the month.

And manufacturing sales edged down 0.2 per cent in January to $48 billion — the fourth decline in five months — impacted by weakness in automotive as well as the petroleum and coal product industry.

Shares in convenience store owner Couche-Tard (TSX:ATD.B) were down after it reported profits rose to $142.5 million, or 75 cents a share, from $86.8 million, or 48 cents, a year earlier. The stock fell 2.3 per cent, or $1.25, to $54.34.

Lululemon (TSX:LLL) shares took a hit after the company said it has yanked its popular black yoga pants from store shelves because the material was too sheer. The company warned of lower than expected sales because of a shortage of the extraordinarily popular clothing items, which make up make up about 17 per cent of all women’s pants and crop pants in its stores.

Shares fell 2.6 per cent, or $1.76, to $65.74.

Traders’ attention will turn to a two-day meeting of U.S. Federal Reserve that is expected to keep record-low interest rates and other measures in an effort to maintain the momentum of U.S. economic growth. The details will be confirmed through a statement and update on economic forecasts due Wednesday.