Canada's main stock index pulled back from a one-month high on Thursday as deal-related news pressured shares of Cenovus Energy Inc and Canadian Imperial Bank of Commerce.

Cenovus shares had their biggest one-day percentage fall ever, down 13.75 per cent at $15.05, after the Canadian company agreed to buy oil sands and natural gas assets from ConocoPhillips for $17.7 billion.

The deal weighed on the overall energy group, which was down 2.6 per cent even as oil prices rose. U.S. crude settled up 1.7 per cent at US$50.35 a barrel.

The drop in Cenovus' stock showed investors are viewing the deal as "highly dilutive to the shareholders and a company with pretty much a pristine balance sheet is now leveraged to the hilt and very, very, very dependent on higher oil prices to make sure the deal actually works as planned," said Norman Levine, managing director at Portfolio Management Corp.

"So the market is giving, in the short term, a very big thumbs down on it," Levine said.

Shares of CIBC fell 2.9 per cent to $113.78 after it raised its offer for PrivateBancorp Inc ahead of a June deadline. CIBC said it offered about US$4.9 billion in cash and stock, up from the earlier US$3.8 billion offer.

The Toronto Stock Exchange's S&P/TSX composite index closed down 78.87 points, or 0.50 per cent, at 15,578.76 the day after the index posted its highest close in more than a month at 15,657.63. Five of the index's 10 main groups ended lower on Thursday.

Elsewhere in the financial sector, Toronto-Dominion Bank's chief executive officer told shareholders at the bank's annual meeting that it does not have a "widespread problem" with its sales practices, responding to a report staffers were pressured to meet targets.

Its shares rose 0.1 per cent to $66.22, while the overall financials group ended less than 0.3 per cent lower.

The modest loss for financials came as data showed that the U.S. economy grew at a faster pace in the fourth quarter than previously estimated. Some of Canada's major banks have operations in the United States.

Dollarama Inc's quarterly profit beat analysts' estimates as the average amount customers spent at its stores increased, sending the Canadian discount retailer's shares to a record high during the session. Its stock finished up 11.2 per cent at $110.88. 

U.S. MARKETS

Wall Street gained on Thursday, led by financial shares, after data showed U.S. economic growth was stronger than previously reported last quarter, helped by robust consumer spending, and the tech-heavy Nasdaq set a record closing high.

The energy sector rose for a third straight day, supported by stronger oil prices and a 8.8-per-cent gain for ConocoPhillips, the biggest percentage riser on the S&P 500 after it agreed to sell oil and gas assets.

The S&P 500 gained for a third straight day, rebounding after its worst week of the year last week.

U.S. economic growth slowed less than previously reported in the fourth quarter as robust consumer spending provided a boost, the Commerce Department said. Gross domestic product increased at a 2.1 per cent annualized rate instead of the previously-reported 1.9 per cent pace.

A record-setting rally for stocks in the wake of President Donald Trump's November election stalled somewhat this month, with some investors pointing to risks to Trump's agenda, including tax reform, after his fellow Republicans failed to pass a health-care bill.

The GDP report is "basically an affirmation that, hey, at the end of the day, Washington will do and say whatever they are going to do, but the economy is marching forward," said Karyn Cavanaugh, senior market strategist at Voya Investment Management in New York.

"It's not just the U.S. economy, but we do see definitely improvement throughout the world," Cavanaugh said.

The Dow Jones Industrial Average rose 69.17 points, or 0.33 per cent, to 20,728.49, the S&P 500 gained 6.93 points, or 0.29 per cent, to 2,368.06 and the Nasdaq Composite added 16.80 points, or 0.28 per cent, to 5,914.34.

The Nasdaq closed at a record high after rising for a fifth straight session.

Financial shares surged 1.2 per cent, with Bank of America and Citigroup propping up the S&P 500.

The defensive utilities sector was the worst-performing group, falling 0.7 per cent.

Investors are also turning their attention to the impending first-quarter earnings season to justify lofty valuations for stocks. The S&P 500 is trading at about 18 times earnings estimates for the next 12 months against its long-term average of 15.

First-quarter earnings for S&P 500 companies are expected to rise 10.1 per cent, according to Thomson Reuters I/B/E/S.

"We continue to see decent-to-improving economic data primarily in employment," said Tim Ghriskey, chief investment officer of Solaris Asset Management in New York. "We are likely to see a good quarter in terms of earnings, so I think there is some anticipation perhaps in the market here."

In corporate news, Lululemon Athletica shares plunged 23.4 per cent after the Canadian yoga and leisure apparel retailer said first-quarter comparable sales were expected to fall.

About six billion shares changed hands in U.S. exchanges, below the 6.8 billion daily average over the last 20 sessions.

Advancing issues outnumbered declining ones on the NYSE by a 1.56-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favored advancers.

The S&P 500 posted 20 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 99 new highs and 19 new lows.