TSX closes higher as profit takers move in

The TSX Venture Exchange lost 11.32 points to 1,206.03.

The Canadian dollar gained 0.45 of a cent to 97.60 cents US, after a report from Statistics Canada showed the country’s inflation rate dropped to its lowest level in nearly two years.

On the TSX, utilities stocks led gains with TransAlta Corp. (TSX:TA) rising four cents to $17.18.

Also rising was the financial sector, which was up 0.7%, despite a move by Moody’s Investors Service to cut the credit ratings of 15 of the world’s largest banks, including Barclays, Deutsche Bank and Royal Bank (TSX:RY).

The ratings agency’s comments appeared to clear the air on some uncertainties about banks with large capital markets exposure. Some of those worries had been built into stock prices months ago when Moody’s announced that it had launched the review. Shares in Royal Bank – a heavyweight on the TSX – were up 63 cents to $51.96.

Leading the decliners was the gold sector, which was down 1.1% as August gold rose $1.40 at US$1,566.90 an ounce on the New York Mercantile Exchange after losing $50 Thursday. The price of gold has fallen 3.8% this week.

July copper prices gained one cent to US$3.31 a pound.

On Wall Street, the Dow Jones average was up 67.21 points to 12,640.78, the Nasdaq rose 33.33 points to 2,892.42 and the S&P 500 gained 9.51 points to 1,335.02.

The August crude contract on the New York Mercantile Exchange closed $1.56 higher at US$79.76 a barrel, ending the week about five per cent lower.

On Wall Street, the Dow Jones average was up 74.29 points to 12,647.86, the Nasdaq rose 27.60 points to 2,886.69 and the S&P 500 gained 9.61 points to 1,335.12.

Shares of Centerra Gold (TSX:CG) plunged 26% as legislators in Kyrgyzstan debated whether to strip the company of its license to mine a major gold field in the Central Asian country, with some accusing it of damaging the environment and profiting excessively. The company’s stock was down $3.07 at $8.71.

Canadian Pacific Railway Ltd. (TSX:CP) said it has a multi-year agreement with U.S. Silica to transport frac sand, but declined to disclose the value of the contract. The operator will be the exclusive rail service provider to the American company’s newest mining and processing facility in Sparta, Wis. Shares of Canadian Pacific were up 23 cents at $74.48.

Statistics Canada said inflation fell to 1.2% last month as Canadians paid less for gasoline, video equipment and some types of clothing, while price gains in many other consumer goods moderated.

On Thursday, the TSX plummeted three per cent, closing more than 350 points lower in its biggest one-day drop since November. Much of the pull was from resource stocks and tanking commodity prices.

European and Asian stocks fell Friday after economic reports suggested growth will weaken in the world’s major economies. Downbeat data on Germany, China and the U.S. came on top of uncertainty over whether European leaders will make progress in tackling their debt crisis at key meetings.

Germany’s Ifo institute reported that business optimism fell for a second straight month in Europe’s largest economy, which has been growing more strongly than the 17-member eurozone as a whole. The survey index dipped to 105.3 from 106.9 in May.

That followed a U.S. Labor Department report Thursday that the four-week average of applications for unemployment benefits jumped to the highest level in nine months. Appetite for financial assets such as stocks was also dented by the results of a monthly HSBC survey, which showed that manufacturing in China has continued to contract.

China’s growth has been a pillar of the global economy in recent years, so its slowdown has been of particular concern to investors.