By: Cameron French
Reuters
Tuesday, June 3, 2003

TORONTO, June 3 (Reuters) - Toronto stocks finished just shy of the break-even mark on Tuesday as investors backed off after Monday's sharp rally, though optimism over a market that has been rising steadily kept most profit-takers at bay.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended the session down 8.91 points, or 0.13 percent, at 6,931.25. Volume was a healthy 214.7 million shares valued at C$2.79 billion.

Fresh from an 80-point rise on Monday, and a near-12 percent rise since mid-March, analysts said taking a breather was necessary.

"There's a little uncertainty about whether there's enough underlying reason for the rally to continue," said Kate Warne, a strategist at Edward Jones in St. Louis, Missouri.

The TSX composite has broken past its previous 2003 high, set in January and is sitting near its highest level since last July.

"I would expect that we'll see stocks continue to move higher. It just may take a while before there's reason or catalyst to see any further move," Warne added.

A strong batch of first-quarter earnings and relief over a quick conclusion to the U.S.-led war in Iraq have underpinned the market's recent gains, but analyst say a rebound in business spending is needed for the market to turn firmly bullish.

"I think if we see companies go out and start to spend more on infrastructure, we're going to get a little more confidence back in the market," said Adrian Mastracci, president of KCM Wealth Management Inc. in Vancouver.

Market momentum was slightly negative, as declining issues outnumbered advancers 578 to 538. The blue-chip S&P/TSX 60 index .TSE60 slipped 0.59 points, or 0.15 percent, to finish at 392.83.

A decision by the Bank of Canada to hold its key overnight rate steady at 3.25 percent had little effect on stocks during the session.

Half of the 10 TSX subgroups rose on Tuesday with health care stocks and telecoms leading the charge.

The health care sector rose 1.4 percent, as Aeterna Laboratories Inc. AEL.TO rose 52 Canadian cents to C$8.98, while Stressgen Biotechnologies Corp. SSB.TO pushed up 19 Canadian cents to C$2.43.

Telecoms stocks rose 1.31 percent, led by Telus Corp. T.TO , which closed up C$1.19 at C$23.01.

Holding back gains was a 0.87 percent retreat by tech stocks, which had advanced for five straight sessions before Tuesday. Tech shares were led lower by Zarlink Semiconductor ZL.TO , which fell 32 Canadian cents to C$6.90.

Inco Ltd. N.TO dropped C$1.23 to C$27.44 after the Western world's largest nickel producer warned it will not meet some supply promises for nickel, copper and cobalt because of a strike by 3,300 workers at its biggest mining operation in Sudbury, Ontario.

Slater Steel Inc. SSI.TO fell 14 Canadian cents to 61 Canadian cents, building on Monday's plunge after the company filed for bankruptcy protection.

U.S. stocks ended modestly higher with the Dow Jones industrial average .DJI up 25.14 points, or 0.28 percent, at 8,922.95, while the tech-focused Nasdaq composite index .IXIC pushed ahead 12.81 points, or 0.81 percent, to 1,603.56.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.