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At midday: TSX positive despite euro zone anxiety

TMX Broadcast Centre manager Kris Backus walks in front of the centre's display board in Toronto.

Frank Gunn/Frank Gunn/THE CANADIAN PRESS

The Toronto stock market was higher Thursday, powered by higher energy and gold stocks after worries about the future of the euro zone had pushed commodity prices to multi-month lows earlier this week.

The S&P/TSX composite index climbed 75.67 points to 11,401.74, held back by financials as worries about the potential fallout from Greece leaving the euro zone continuing to discourage investors.

The TSX Venture Exchange was ahead 9.9 points to 1,227.64.

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A string of losses have left the TSX at its worst level since early October of last year and down more than 10 per cent from its most recent highs registered at the end of February.

There was also some high drama ahead of Canadian Pacific Railway's annual meeting Thursday, with chief executive Fred Green stepping down after his defenders lost a proxy battle.

U.S. fund manager Bill Ackman has pushed for Mr. Green's removal since last year.

One of the top priorities will be to begin the process of replacing Mr. Green, likely with Hunter Harrison a retired former CEO of rival Canadian National Railway, although Mr. Ackman said the appointment isn't a done deal.

"They mounted a good fight," said Chris Kuflik, investment adviser at ScotiaMcLeod.

"Hunter Harrison did a fantastic job at CN and CP did need a shakeup because their metrics were nowhere near as good as CN's."

CP shares were up $1.46 to $77.32.

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The Canadian dollar lost 0.3 of a cent to a four-month low of 98.45 cents (U.S.). The loonie has slid almost three cents (U.S.) since the start of the month as traders have avoided risky assets like commodities and resource-based currencies like the loonie amid rising worries about the future of the euro zone and the common euro currency.

U.S. markets were lower as a key business barometer for the U.S. Northeast unexpectedly weakened in May. The monthly survey by the Federal Reserve Bank of Philadelphia fell to minus 5.8 from 8.5 in April, well below expectations.

The Dow Jones industrials declined 31.03 points to 12,567.52.

The Nasdaq composite index fell 20.7 points to 2,853.34 and the S&P 500 index dipped 4.02 points to 1,320.78.

Greece is being kept afloat by huge international bailouts. But there are increasing worries that parties demanding an end to the grinding austerity measures that made those bailouts possible will hold the balance of power after next month's elections.

Such a move could force Greece out of the euro zone with unpredictable consequences for the region's financial system and the wider global economy.

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Meanwhile, commodity prices were positive after a string of bruising losses that have left prices for oil and metals at levels not seen in months.

Demand concerns have been a big reason for the slide in prices. But commodities have also been driven downward by the rising American currency. That's because prices are denominated in U.S. dollars and a higher greenback makes oil and metals more expensive for holders of other currencies.

The energy sector gained 0.8 per cent as the June crude contract on the New York Mercantile Exchange edged up a dime to $92.91 (U.S.) a barrel after closing Wednesday at its lowest level since last November. Canadian Natural Resources climbed 64 cents to $29.97 (Canadian).

Imperial Oil says it may sell its refinery in Dartmouth, N.S., or convert it into a terminal. It noted increased competition and lower demand for the refinery's products and said the facility has not met financial expectations. Imperial shares shed 33 cents to $41.67.

The gold sector was also higher, up six cents as bullion gained $38.50 to $1,575.10 (U.S.) an ounce after closing at its worst level since last July. Barrick Gold Corp. climbed $2.29 to $38 (Canadian) while Goldcorp Inc. ran up $2.38 to $35.57.

The base metals component was ahead 0.15 per cent as copper dipped a penny to $3.47 (U.S.) after ending Wednesday's session at its lowest level since mid-January. First Quantum Minerals declined 20 cents to $17.54 (Canadian) while Teck Resources was up 39 cents to $30.33.

The financial sector lost 0.7 per cent amid worries about the health of euro zone banks as investors worry that destabilization could also hit other heavily indebted countries such as Spain, Ireland, Portugal and Italy.

Royal Bank was off 75 cents to $52.28 while TD Bank dropped 82 cents to $78.11.

Shares in Bankia, the recently nationalized Spanish bank, plunged by more than 20 per cent Thursday on a local report that customers have withdrawn more than 1-billion (Canadian) since the state took it over last week.

The bank is Spain's fourth largest and is heavily exposed to Spain's collapsed property market.

And on Wednesday, Greece's president said depositors were pulling hundreds of millions of euros out of banks, weakening the country's already strained financial system.

"You're already seeing a run on the banks happening . . . and it's coming more to a head now," added Mr. Kuflik.

Traders are also demanding more money to buy government debt.

Spain managed to auction nearly 2.5-billion (Canadian) in medium-term debt amid strong demand but at sharply higher interest rates. The Spanish Treasury on Thursday sold three kinds of notes, two maturing in 2015 and one in 2016. Of them only one was strictly comparable to previous sales and the interest rate, or yield, on that three-year bond went up to 4.87 per cent from 4.04 per cent on May 3.

European bourses were down sharply with London's FTSE 100 index down 1.03 per cent while Frankfurt's DAX and the Paris CAC 40 each declined one per cent.

In other corporate news, Sears Canada shares fell $1.75, or 13.3 per cent, to $11.40 after it said its U.S. parent will dramatically reduce its holdings in the troubled department store chain and may sell all of its stake. About 95 per cent of the common shares of Sears Canada are currently owned by Sears Holdings Corp., which also owns the Sears and Kmart department store chains in the United States.

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