Toronto's main index finished modestly lower on Wednesday as weakness in the financial sector outweighed gains by gold stocks. The market closed lower for the second straight session.

The S&P/TSX Composite Index fell 51.95 or 0.58% to finish at 8,797.44. The market touched below 8,700 earlier in the day before recovering some of the losses with a final-hour surge.

The Financial Index fell 1.6% but moved off the lows of the session. CIBC (CM.TO) lost 2.9%, National Bank of Canada (NA.TO) dropped 2.75% and Scotiabank (BNS.TO) declined 2.3%.

Financials saw weakness as traders reacted negatively to the release of the results of the Treasury Department's auction of $34 billion worth of five-year notes. The auction drew a yield of 1.849 percent and a bid-to-cover ratio of 2.02.

Meanwhile, the Gold Index jumped 3.1% and materials stocks added 1.9%. On the Comex, gold finished up $12 at $935.80 per ounce. Among the big names, Kinross (K.TO) rallied 3.7% and Goldcorp (G.TO) gained 3.2%.

In other corporate news, Research in Motion (RIM.TO) lost 4.4% after being downgraded to Underweight from Overweight by JPMorgan.

Ivernia (IVW.TO) surged 29.2% after UK-based Griffin Mining revealed that it intends to make an unsolicited cash offer for the Canadian firm at a price of C$0.15 per share, totaling about C$27 million.

Compton Petroleum Corp. (CMT.TO) lost 3.1% after the company reported a net loss for the fourth quarter of C$95.94 million or C$0.74 per share, compared to net income of C$50.46 million or C$0.38 per share in the year-ago quarter.

Tembec (TMB.TO) added 4.3%. The company said its sawmill located in Quebec will shut down for a minimum of three months due to the current and foreseen weak market conditions for lumber, as well as the lack of a market for chip residuals.

In economic news, data released by National Bank Financial revealed the Teranet-National Bank National Composite House Price Index dropped 2.4% in the month of January.

Across the border, a Commerce Department report showed that new home sales rose 4.7 percent to an annual rate of 337,000 in February from an upwardly revised January rate of 322,000. The results surprised economists, who had been expecting sales to fall to 300,000 from the 309,000 originally reported for the previous month.

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