Source: The Canadian Press

The Toronto stock market finished in the red Wednesday after weakened financials overpowered the effects of surging gold prices.

The S&P/TSX composite index tumbled 23.31 points to close at 12,147.26, while the TSX Venture Exchange rose 7.93 points to 1,688.70.

The TSX gold sector was higher as the precious metal soared to another record close. The bullion contract for December was up $17.80 at US$1,292.10 in New York trading. Kinross Gold Corp. (TSX:K) was down 10 cents at C$19.45, while Yamana Gold Inc. (TSX:YRI) rose 15 cents to C$11.38.

Financials stocks tarnished the market’s shine, with the sector down 1.1%. The shift followed comments Tuesday from the U.S. Federal Reserve that inflation remains below levels that indicate a healthy economy and that it was ready to act to provide “additional accommodation” to support the recovery. The Fed comments suggest low interest rates could prevail for some time to come, which could ultimately affect bank profits.

CIBC (TSX:CM) shares fell 44 cents to $73.42.

“Life insurance companies are getting hit hard, and that has to do with (low) interest rates,” added Jean Francois Dion, portfolio adviser with Canadian Equities, RBC Dominion Securities.

Manulife Financial Corp. (TSX:MFC) was down 61 cents or more than 4.5% at $12.79.

Oil prices lost ground after the U.S. Energy Information Administration said inventories increased by a million barrels last week. The benchmark crude for November delivery tumbled 26 cents to close at US$74.71 a barrel on the New York Mercantile Exchange. Suncor Energy Inc. (TSX:SU) was off 48 cents at C$32.35.

Technology stocks shuffled back 0.5%, but Research In Motion (TSX:RIM) gained 71 cents to $49.

The materials sector lifted 1%. Potash Corporation of Saskatchewan (TSX:POT) filed documents in a U.S. district court asking it to block a hostile takeover by Australian-Anglo mining giant BHP Billiton. Shares of Potash were 74 cents higher at $151.29.

TSX mining and metals stocks were ahead 1.3% as the December copper contract on the Nymex moved up 0.84 cents to US$3.56 a pound.

Mining powerhouse Teck Resources Ltd. (TSX:TCK.B) announced an agreement with industry giant Suncor under which Teck will invest in Suncor’s Wintering Hills project in Alberta. Suncor will own a 70% interest and operate the project, while Tech will invest about $66 million and own the remaining 30%.

Teck shares moved up 88 cents to $39.91.

The Canadian dollar was down 0.28 of a cent at 97.11 cents US after Statistics Canada said retail sales slipped 0.1% in July to C$35.9 billion.

CIBC economist Krishen Rangasamy said the retail sales numbers surprised to the downside. “The one-tick downward revision to the prior month’s retail sales growth adds salt to the wounds,” Rangasamy wrote in a note.

Rangasamy said the introduction of the HST in Ontario and British Columbia, and an increase in the tax in Nova Scotia, “left a clear mark.”

On Wall Street, the Dow Jones industrial average dropped 21.72 points to 10,739.31. The Nasdaq composite index was down 14.80 points at 2,334.55, while the S&P 500 slipped 5.5 points to 1,134.28.

The Fed didn’t announce specific actions to strengthen the economy Tuesday, but investors interpreted its statement as a signal that the central bank could step up its bond-purchasing program down the line.

Investors had little incentive to move more money into stocks, so they turned their focus to bonds and gold. Treasurys rose again, pushing their yields lower, and gold climbed to another record.

In corporate news, Enerplus Resources Fund (TSX:ERF.UN) is shifting its portfolio away from the oilsands and toward two promising U.S. energy plays with an agreement to sell its Kirby oilsands leases for $405 million to an undisclosed buyer. Its units moved up nine cents to $24.38.

Baffinland Iron Mines Corp. (TSX:BIM) stock shot up 38 cents to close at 94 cents per share Wednesday, well above the 80 cents per share that Nunavut Iron Ore Acquisition Inc. is offering in its $274.3-million unsolicited takeover bid.

Fort Chicago Energy Partners LP (TSX:FCE.UN), part owner of the Alliance natural gas pipeline, jumped four cents to $11.34, after announcing it has expanded its power business with a $314-million deal to acquire Pristine Power Inc. (TSX:PPX), an electricity generator with operations in British Columbia and Ontario.

Insurance giant Fairfax Financial Holdings Ltd. (TSX:FFH) says it is seeking regulatory approval to buy back up to 1.6 million of its subordinate voting shares on the Toronto Stock Exchange. It shares increased $1.50 to $411.

Shoppers Drug Mart (TSX:SC) says it is teaming up with a bank to offer financial services as it diversifies away from its core pharmacy business that is being hit by generic drug price reforms in Ontario. Shares lifted 87 cents to $39.30.

In earnings, Microsoft Corp. said it was raising its dividend for the first time in two years, while computer software maker Adobe Systems Inc. said its fiscal third-quarter profit surged, but it said revenue during the current quarter will likely fall short of expectations.

Food maker General Mills Inc. posted net income of $472.1 million, or 70 cents per share, for the period ended Aug. 29. That’s higher than its $420.6 million, or 62 cents per share, earnings a year ago.