The Toronto Stock Exchange’s benchmark index clawed its way back from a triple-digit loss to end slightly lower on Tuesday as strength in financials offset a drop energy shares.

The S&P/TSX composite index ended down 46 points, or 0.34% at 13,643.19.

The energy sector stepped back 2.35% as oil prices retreated. Crude for August delivery dropped US$3.09, or 2.3%, to settle at US$127.95 a barrel on the New York Mercantile Exchange, the lowest close since June 5.

In Toronto, EnCana declined $2.86 to $77.17 and Canadian Natural Resources fell $3.74 to

The gold sector backed off 2.65% as gold for August delivery dropped US$15.20 to end at US$948.50 an ounce on the Nymex.

A major decliner was Canadian Pacific Railway Ltd., which cut its profit outlook after a 40% drop in second-quarter earnings to $155 million because of surging fuel costs and deteriorating economic conditions. Its shares pulled back $2.42 to $64.21.
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Canadian National Railway Co. fared better after second-quarter earnings came in at $459 million, down from $516 million a year ago, as revenue rose four% to $2.1 billion. But CN said it expects to meet its full-year earnings target and its shares climbed $2.31 to $53.28.

The junior S&P/TSX Venture composite index fell 24.01, points, or 1.05%, to finish at 2,263.66.

The Canadian dollar slipped 0.69¢ from Monday’s close, to end at US99.17¢.

Statistics Canada reported that retail sales in current dollars rose 0.4% in May to $35.8 billion, mainly due to increased sales at gasoline stations. This was the seventh increase in eight months.

In New York, U.S. stocks rose as rallied as oil prices retreated, despite weaker earnings from several big U.S. companies.

The Dow Jones industrial average rose 135.16 points, or 1.18%, to 11,602.50, while the S&P 500 ended up 17.00 points, or 1.35%, at 1,277.00. The tech-heavy Nasdaq composite index was up 24.43 points, or 1.07%, at 2,303.96.

Wachovia, the fourth largest U.S. bank, said it lost US$8.86 billion in the second quarter, hurt by a big goodwill charge and an increase in reserves for bad loans as mortgage defaults soared.

After markets closed, Yahoo posted a nearly 19 percent fall in net profit, and net revenue short of lowered Wall Street expectations.

Washington Mutual Inc, the largest U.S. savings and loan, reported a US$3.33 billion second-quarter loss, as the number of soured mortgages soared.