Toronto stocks are holding on to modest gain after the Bank of Canada delivered a surprise rate cut Tuesday, but a rancorous round of Senate testimony by the Fed chairman Alan Greenspan has kept U.S. markets subdued.

The S&P/TSX composite index is up 10 ticks to 7,127. Volume remains on the light side at 99 million shares, with buying ahead of the selling by 49:44. Market breadth is fairly even too, with winners holding a slight edge over losers.

Most TSX sectors are up a little on the rate cut news, but nothing has gained as much as three-quarters of a percentage point.

Financials are stronger after Merrill Lynch reported some very robust earnings. There are also gains in industrials, diversifieds and techs. But there is weakness in the telecoms, golds and health care, which are restraining overall gains.

Financials are bounding ahead, led by 0.6% gains in Manulife and Royal Bank. There is also some rallying in Sun Life, Scotia, and CIBC.

Techs are stronger, despite a 0.7% slide in Nortel and a 2.3% slide in Zarlink. Celestica is up 1.4% though, and it is moving more market cap than Nortel. ATI has gained 2.8%, and Cognos and Sierra Wireless are both stronger, too.

Cinram is up 1.7% on news that it may buy AOL Time Warner’s disc unit. Telus is leading the telecoms down, with 2.2% drop.

Other gainers include Bombardier and Abitibi, which may be benefiting from the rate cut and the resulting slide in the dollar.

Biovail is leading the health care group down once again, with a 2.4% slide in decent volume. This is enough to overwhelm some strength in CML Healthcare.

Golds are down, too, despite gains in smaller producers such as Bema Gold and Aur Resources. But, there is some committed selling in Wheaton River, down 2.2%, and Goldcorp.

There is also weakness in names such as Sears Canada and Air Canada.

In New York, markets have been following Greenspan’s Senate testimony fairly closely. He suggested that the Fed may cut interest rates further, and has contemplated other methods of expanding the money supply, but his clearest message is that rates are likely to remain low for a long time.

Markets gyrated around all morning in reaction to a fairly rough and tumble questioning session by some grandstanding Congressmen. At midday, the Dow Jones industrial average is down 17 points to 9,161. The S&P 500 has gained a point to 1,005. The Nasdaq composite has added five points to 1,760.

The S&P/TSX Venture index has not been inspired by the rate cut either. It is down four points at midday to 1,116. Volume is on the low side at 13.2 million shares, led by a 1¢ drop in Cubix Investments to $1.35 on volume of 509,200 shares.