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At midday: TSX flat as Home Capital slumps; energy stocks gain

Canada’s main stock index slipped on Wednesday, weighed by a plunge in shares of Home Capital Group Inc after the mortgage lender agreed to a major credit line, while energy stocks moved higher as oil prices reversed losses.

Home Capital fell 58.7 percent to C$7.06 after the alternative lender said it would secure a $2-billion redit line to shore up its shrinking balance sheet.

Other influential decliners included Burger King and Tim Horton parent Restaurant Brands International, which fell 4.5 per cent to $75.82 despite reporting profit and revenue that beat expectations.

The energy group climbed 0.6 per cent, as U.S. oil prices pushed higher following a bigger-than-expected drawn on the country’s crude inventories.

At 11:16 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 0.05 points, or 0.01 per cent, at 15,746.14. Six of its 10 main groups were in positive territory.

Teck Resources Ltd advanced 3 per cent to $29.71 after it said it will double its dividend payout.

Industrials rose 0.5 per cent, led by the country’s two main railway companies after recent solid results. Canadian National Railway Co added 0.8 per cent to $99.90 while rival Canadian Pacific railway Ltd added 1.0 per cent to $212.08.

Canadian retail sales fell more than expected in February, dragged down by lower vehicle purchases and cheaper prices for gasoline at the pump, but the decline did not alter expectations for strong economic growth in the first quarter.

Equities in major markets touched a record for a third straight session on Wednesday as U.S. shares rose on strong earnings and the prospect of tax cuts, while the euro pulled back after two days of strong gains.

Treasury Secretary Steve Mnuchin, who is leading U.S. President Donald Trump’s effort to craft a tax package that can pass Congress, described the plan as the “the biggest tax cut” in U.S. history and said he hoped it would attract broad support.

“We have a pretty good idea that he (Trump) is targeting lower corporate taxes, lower individual taxes and a simplification of the process, but all that is in an ideal world,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, NJ.

Thermo Fisher Electron, up 4.4 per cent, and Edwards Lifesciences, up 9.5 per cent, were the biggest boosts to the benchmark S&P 500 index after results.

The Dow Jones Industrial Average rose 33.93 points, or 0.16 per cent, to 21,030.05, the S&P 500 gained 5.04 points, or 0.21 per cent, to 2,393.65 and the Nasdaq Composite added 5.39 points, or 0.09 per cent, to 6,030.88.

European shares are at 20-month highs during a three-day rally sparked by centrist Emmanuel Macron’s win in the first round of French presidential elections, which considerably reduced the risk of a French exit from the single currency.

Higher-than-expected earnings also helped European stocks reverse early falls and move higher.

The pan-European FTSEurofirst 300 index rose 0.46 per cent, to touch its highest level since August 2015. MSCI’s gauge of stocks across the globe gained 0.17 per cent after hitting a high of 456.97, to set a record for a third straight session.

Overall, first-quarter earnings for STOXX 600 companies were expected to rise 5.5 per cent, according to Thomson Reuters data. In comparison, S&P 500 companies in the U.S. are expected to show 11.4-per-cent earnings growth expected for quarter.

The euro was down 0.46 per cent to $1.0875 after strengthening by more than 2 per cent in the prior two sessions in the wake of the first round of French elections.

The threat of a U.S. government shutdown this weekend also receded after Mr. Trump backed away from demanding that Congress include funding for his planned border wall with Mexico in a spending bill.

U.S. Treasury prices were little changed ahead of the tax announcement after paring steep losses sustained in the last few sessions. Benchmark 10-year notes last rose 2/32 in price to yield 2.3215 per cent, from 2.329 per cent late on Tuesday.

Oil prices reversed course and turned higher after data from the U.S. Energy Information Administration showed a bigger-than-expected draw in crude inventories.

U.S. crude rose 0.69 per cent to $49.90 per barrel and Brent was last at $52.14, up 0.08 percent on the day.

Investors were also looking ahead to Thursday’s policy meeting of the European Central Bank.

While no changes are expected, policymakers see scope for sending a small signal in June towards reducing monetary stimulus, according to sources, another factor underpinning the single currency.