Source: The Canadian Press

The Toronto stock market was lower Tuesday amid more positive earnings from the financial sector and weaker oil prices.

The S&P/TSX composite index closed down 25.34 points at 13,250.67 as traders also took in news that the Bank of Canada is leaving its key rate unchanged at 1%.

Analysts said the market was unaffected by the announcement since it had been widely anticipated.

“There’s no surprise to this whatsoever given all the volatility, given everything that’s going on in Europe, worry about (debt) contagion from Ireland,” said Kathryn Delgreco, investment adviser at TD Waterhouse.

“It only makes sense that the bank remain on hold after three previous hikes.”

The Canadian dollar lost early momentum, down 0.6 of a cent to 98.87 cents US following the announcement as it looked more likely the bank would hold off on raising rates until at least the middle of 2011. The U.S. dollar also turned higher against a variety of currencies in the afternoon.

The TSX Venture Exchange was off 10.52 points at 2,117.21.

Meanwhile, Bank of Montreal (TSX:BMO) reported that its profits rose 14% to $739 million in the fourth quarter, beating expectations.

The bank says its net income was equal to $1.26 on a cash per share basis, about five cents above analyst expectations according to a survey from Thomson Reuters. Its shares rose $1.87 to $61.87 and the sector rose 0.38%, weighed down by Scotiabank (TSX:BNS) which moved down $1.12 at $55.

The results capped a mostly positive run of quarterly reports from the big Canadian banks. National Bank (TSX:NA) was among those beating expectations and the only one to raise its dividend, while Toronto-Dominion (TSX:TD) narrowly missed and the Royal Bank (TSX:RY) fell well short.

“We do expect that all banks will likely start to raise their dividends next year, with Bank of Nova Scotia probably being the next one to do it,” Delgreco added. “They may be quarter earlier than other banks.”

The energy sector climbed about 0.4% even as oil prices slipped after rising to a two-year high above US$90 a barrel on Tuesday due to the effects of a weaker U.S. dollar, great U.S. fuel demand and icy weather in Europe.

The January crude contract on the New York Mercantile Exchange was off 69 cents at US$88.69 a barrel.

Oil prices had climbed more than US$10 in the past two weeks. Suncor Energy (TSX:SU) gained 59 cents to C$36.66.

The base metals sector ran up almost 2% as metal prices also made gains with the March copper contract on the Nymex losing more than half of early gains but still ahead four cents at US$4.05 a pound. Quadra FNX Mining (TSX:QUX) improved by 50 cents to C$15.38 while First Quantum Minerals (TSX:FM) ran ahead $5.81 to $105.30.

The gold sector led decliners as February gold in New York lost early gains to decline $7.10 from Monday’s latest record close to US$1,409 an ounce. Goldcorp Inc. (TSX:G) faded 80 cents to $47.36, while Kinross Gold Corp. (TSX:K) fell 53 cents to C$18.84.

Telecoms were also weak with Rogers Communications Inc. (TSX:RCI.B) down 58 cents at $34.78.

Research In Motion Ltd. (TSX:RIM) also weighed on the TSX, with the BlackBerry maker down $1.13 at $62.72.

U.S. indexes had earlier rallied after U.S. President Barack Obama announced an agreement with Republicans to extend the Bush-era tax cuts for two years, while also renewing unemployment benefits and granting a one-year reduction in Social Security taxes.

The deal still requires Congressional approval, yet it gives investors encouragement since the tax cuts were set to expire at the end of the year.

But indexes lost much momentum late in the afternoon with the Dow Jones industrial average losing an 88-point lead to close down 3.03 points at 11,359.16.

The Nasdaq composite index was ahead 3.57 points at 2,598.49 while the S&P 500 index added 0.63 of a point to 1,223.75.

Elsewhere in the financial sector, Canadian Western Bank (TSX:CWB) shares were ahead $1.07 at $28.19 after the regional lender said its fourth-quarter profit rose 29% to $39.1 million. The bank also raised its quarterly dividend by 18% to 13 cents a share.

CWB was the second Canadian bank to raise its dividend this quarter following National Bank.

Bloomberg reported that TD Bank may buy Chrysler Financial Corp. from Cerberus Capital Management LP. Sources said a deal could be reached as early as this week to acquire the auto loan company for almost US$6 billion to $7 billion, which is the company’s book value, or assets minus liabilities. TD shares added $1.31 to $72.17.