Feb. 10, 2009 (Baystreet.ca) --

12:30 pm EST An early rally on Bay Street turned sour by mid-Tuesday as gold prices folded and investors digested dismal earnings from car parts maker Magna International

As morning turned to afternoon, the S&P TSX Composite Index had lost any early momentum and sunk 50.55 points to 7,597.12

The overall mood was more positive on New York markets, which ran up sharply after Federal Reserve chairman Ben Bernanke told Congress the U.S. recession should end this year.

On the earnings front, Magna International shares were down 30 cents to $31.85 in Toronto after the auto parts giant reported a net loss of $148 million U.S. in the fourth quarter of 2008, reversing a year-earlier profit of $28 million. It expects 2009 to be worse for the auto industry, even with government bailout packages to the automakers.

The TSX financial sector had a volatile morning, in negative territory early in the day as investors looked to earnings reports coming out from the big Canadian banks this week and next and worries about American banks being nationalized.

At late morning, the sector was up as TD Bank, which reports earnings Wednesday, gained 63 cents to $3.43 and Royal Bank, which releases results Thursday, was up 51 cents to $26.33.

The energy sector moved higher as oil prices advanced. EnCana Corp. advanced $1.22 to $46 on the TSX while Canadian Natural Resources was up $1.51 to $38.05.

The base metals sector was lower amid an announcement that HudBay Minerals and Lundin Mining have scrapped their friendly merger deal as HudBay shareholders threatened to vote down the agreement.

However, HudBay will keep its 19.9% ownership stake in Lundin that it acquired in December 2008 and as long as the company owns 10% or more, HudBay will be entitled to have one nominee on the Lundin board. HudBay shares jumped 62 cents to $5.40 while Lundin shares fell eight cents to 72 cents.

The gold sector fell on the TSX. Barrick Gold Corp. faded $3.72 to $40.96.

NovaGold Resources Inc. shares were down 64 cents to $3.18 after it said Monday that it lost $195.3 million in its most recent quarter, but the troubled resource company said it has secured new financing and is well positioned. This compared with a loss of $53.5 million a year ago.

Maple Leaf Foods Inc reported a smaller fourth-quarter loss on Tuesday, hurt by the lingering effects of a costly recall of tainted meat. The company, one of Canada's largest food processors, said its loss narrowed to $14.6 million, or 12 cents a share, from $22.1 million, or 17 cents a share, a year earlier.

Thomson Reuters Corp., the financial news and data provider created by a merger last year, said fourth-quarter profit gained 51% after the combination.