The Canadian Press

The Toronto stock market closed slightly lower Tuesday, supported by commodity stocks on advancing oil prices and record high gold prices and pulled down by financial stocks in the wake of a downgrade in the American banking sector.

Trading was also sluggish following a disappointing earnings report from U.S. health-care giant Johnson & Johnson and the market was left struggling for traction after a strong advance last week.

“In terms of the indexes, they’re getting to the high end of their trading ranges, so people need to see something convincing to really take them through,” said Colin Cieszynski, market analyst at CMC Markets Canada.

The S&P/TSX composite index closed well above session lows, coming back from a 137-point decline to close down 23.38 points to 11,413.54. Strong gains in mining and energy companies pushed the TSX up 4.36% last week.

Meanwhile, rising commodity prices, a weak U.S. currency and a strong employment report for last month combined Tuesday to send the Canadian dollar to its highest level since the late summer of 2008.

The loonie closed up 0.73 of a cent from Friday’s close at US96.48¢ after going as high as US97.42¢, its highest level since August 2008. The currency also surged 3.37¢ last week.

The energy sector was ahead 2.14% as the November crude contract on the New York Mercantile Exchange rose 88¢ to US$74.15 after running up US$1.50 Monday amid expectations of stronger demand during the winter. EnCana Corp. (TSX:ECA) climbed 93¢ to $63.82 while Canadian Natural Resources (TSX:CNQ) advanced $1.98 to $74.95.

The TSX financial sector moved down 1.57% in the wake of a downgrade of Goldman Sachs Group by analyst Meredith Whitney to neutral from buy after the stock posted steep gains since the company reported earnings for the second quarter. Goldman shares drifted US$2.92 lower to US$187.23.

The downgrade came ahead of quarterly reports from some of the largest U.S. banks this week. JPMorgan Chase & Co. will issue its report on Wednesday, followed by Goldman Sachs and Citigroup Inc. on Thursday, and Bank of America Corp. on Friday.

Better-than-expected first-quarter results from banks set off the stock market’s rally seven months ago, and even better second-quarter results helped re-ignite the rally in July.

In Toronto, Scotiabank (TSX:BNS) was down 77¢ to $46.49 and Manulife Financial (TSX:MFC) moved 45¢ lower to $22.08.

The TSX Venture Exchange rose 14.93 points to 1,322.28.

American markets were also weak after Johnson & Johnson beat expectations on earnings but missed on revenue.

Investors want to see signs that businesses and consumers are picking up their spending and that companies have been able to drive higher profits through revenue growth, not just through deep cost cuts, which helped boost income in the second quarter.

“They’re not telling us the hoped-for better-than-expected sales,” said Linda Duessel, equity market strategist at Federated Investors. “We want sales growth now.”

The Dow Jones industrials was 14.74 points lower to 9,871.06 after rising about four% last week.

The Nasdaq composite index gained 0.75 of a point to 2,139.89 while the S&P 500 index fell 3.01 points to 1,073.18.

Other commodity prices were mixed with December gold on the Nymex ahead $7.50 to a record US$1,065 an ounce as the U.S. dollar hit a fresh 14-month low while copper backed off 6.25¢ at $2.79 a pound.

The gold sector rose 1.29% with Yamana Gold Inc. (TSX:YRI) ahead 47¢ to $13.09.

The TSX base metals sector was up 1.09% with Teck Resources (TSX:TCK.B) ahead 39¢ to $33.10.

Mining giant Rio Tinto announced it will double its interest in Ivanhoe Mines (TSX:IVN) to 19.7%. Ivanhoe says it will use the proceeds of Rio Tinto’s US$388 million investment to advance the Oyu Tolgoi copper-gold mining complex in Mongolia. Ivanhoe shares dipped 5¢ to $12.95.

Shares in auto parts giant Magna International (TSX:MG.A) were down $1.15 to $45.42 as General Motors CEO Fritz Henderson said the automaker could finalize the sale of its German auto unit Opel as early as this week, about a month ahead of schedule.

Despite labour union objections over possible job losses, the sale of GM’s Opel and Vauxhall units to Magna, which along with Russia’s state-owned Sberbank acquired a 65% stake in the German-based Opel from General Motors Co. last month, is expected to go ahead, Henderson told reporters.

NAL Oil & Gas Trust (TSX:NAE.UN) has agreed to acquire Calgary-based Breaker Energy Ltd. (TSX:WAV) in a deal valued at $403 million.

@page_break@NAL shares lost 9¢ to $12.45 while Breaker shares rose five¢ to $5.75.

Norbord Inc. (TSX:NBD), a troubled wood panel manufacturer controlled by Brookfield Asset Management (TSX:BAM.A), said Tuesday it plans a reverse stock split that will see shareholders receive one consolidated share for every 10 they hold prior to the transaction, effective Oct. 16. Its shares fell eight¢ to $1.54.