TSX ends flat; gold gains offset other sector losses

Canadian stocks were little changed in choppy trade on Thursday as gold mining gains offset a slew of weak data from Europe, China and the United States, which added to fears about global growth.

U.S. financial markets will have a long weekend after Friday, closing on Monday for the Memorial Day holiday.

On Wednesday, the Toronto Stock Exchange's S&P/TSX composite index (TSX-I) rallied 300 points to finish sharply higher.

Twenty-four hours later another late-afternoon surge in gold mining stocks helped the index avert a loss and end up for the third day in a row.

"The swings are showing how nervous the European situation is overshadowing our markets," said Rick Meslin, head of Canadian equities at UBS Securities Canada. "It can be great news or awful news and it happens moment by moment."

On Thursday, markets were boosted late by comments from Italian Prime Minister Mario Monti, who said in an interview on a television talk show that he believed Greece would remain in the euro zone.

The TSX finished up 1.27 points at 11,566.07, rebounding nearly 100 points after hitting a session low at 11,472.75. It was its highest close in ten days.

Gains were led by the heavyweight materials sector, which includes gold miners, which rose 0.7 percent. Gold stocks rallied for the second straight day as bullion halted its three-day slide, boosted by International Monetary Fund data showing another rise in central bank gold holdings in April.

The most influential gainers included Iamgold Corp, up 5.3 percent at $11, Eldorado Gold, which climbed 2.4 percent to $11.96 and Kinross Gold, up two percent to $8.65.

Meslin said increased uncertainty about whether Greece, which has elections next month, will stay in the euro zone had investors treating gold as a safe-haven play.

"Gold is turning into again just what gold always used to be, which is that safety trade," he said. "There's been so much correction in gold shares that finally now when things are bad in Europe you see gold react well."

Investor confidence was still shaky after Wednesday's news that European Union leaders have been advised by senior officials to prepare contingency plans in case Greece quits the single currency.

Sentiment worsened after PMI data for the euro zone region showed activity was declining at a faster pace than expected in May.

Manufacturing output also slowed in the world's two largest economies. China's industrial sector retreated to 48.7 in May from a final reading of 49.3 in April and a U.S. manufacturing index dipped to 53.9 in May from 56.0 the previous month.

Canadian financial shares fell 0.7 percent after some mixed second-quarter earnings results from the country's top lenders.

Toronto-Dominion Bank shares rose 0.3 percent to $78.99 after Canada's No. 2 bank said on Thursday its quarterly profit rose 20.7 percent.

However, gains were muted by Royal Bank of Canada, which tumbled nearly three percent to $51.38 after Canada's largest bank reported a seven percent decline in quarterly earnings on Thursday.