The Toronto stock market closed lower despite another series of positive earnings reports and optimistic outlooks.

The S&P/TSX composite index broke a six-session winning streak, falling 25.39 points to 10,515.32. The drop came after the main index jumped almost 800 points in recent days, riding a wave of higher oil prices and earnings reports that raised confidence that the economy is improving.

"This is the most solid evidence that we've seen that conditions are improving," said Jack Ablin, chief investment officer at Harris Private Bank in New York, of the earnings reports.

The Canadian dollar backed off from early sharp gains after the Bank of Canada warned that higher value of the loonie, as well as ongoing restructuring in key industrial sectors, is significantly moderating the pace of overall growth.

The central bank made the comment as it announced it was leaving its key interest rate unchanged at a quarter point.

The dollar has risen sharply over the past week and a half, benefiting from a weak U.S. dollar and the recent surge on global stock markets. The currency declined 0.02 of a cent Tuesday to 90.33 cents US, after hitting the 91-cent level earlier.

The industrials sector was the leading group, up 2.1 per cent after Canadian National Railways (TSX:CNR) said it expects that its business has hit bottom and volumes should pick up steam in the second half of the year.

CN said that a weakened North American economy and global slowdown caused its second-quarter profits to drop nearly 14 per cent to $387 million while revenues fell to $1.78 billion from $2.1 billion a year ago.

"We were happy with the numbers, all things considered," said Garey Aitken, chief investment officer at Bissett Investment Management.

"There's no getting around the fact that volumes are way down for the transport industry and that has a big impact on revenues."

CN shares rose $1.06 to $50.55 while Canadian Pacific (TSX:CP) advanced $1.67 to $43.55.

Mining stocks were the biggest drag on the TSX. The gold sector shed 1.5 per cent as the August bullion contract in New York stepped back $1.90 to US$946.90 an ounce. Kinross Gold Corp. (TSX:K) faded 42 cents to $22.26.

The base metals group was off almost two per cent with the September copper contract off 1.8 cents at US$2.451 a pound. Equinox Minerals (TSX:EQN) lost 10 cents to $2.60.

Ivanhoe Mines Ltd. (TSX:IVN) shares declined 23 cents to $8.46 as it said it will resume talks with the Mongolian government next Monday to conclude an investment and profit sharing agreement for the Oyu Tolgoi copper-gold development project.

The TSX Venture Exchange slipped 3.45 points to 1,114.64.

New York markets extended gains as the Dow Jones industrials climbed 67.79 points to 8,915.94.

The Nasdaq composite rose 6.91 points to 1,916.2 while the S&P 500 index was up 3.45 points to 954.58.

Pleasing investors was U.S. heavy equipment maker Caterpillar Inc., which boosted its 2009 profit outlook. Its shares jumped $2.83 or 7.7 per cent to US$39.48.

The good news from Caterpillar was counterbalanced by more caution about the economy in remarks by Federal Reserve chairman Ben Bernanke in front of Congress.

Bernanke repeated the Fed's forecast that the economy should start growing again in the second half of this year, but only modestly and with rising unemployment.

Worries about CIT Group Inc. also flared up again after the small-business lender said a US$3-billion loan from major bondholders still might not be sufficient to cover a drain on cash as borrowers have rushed to tap credit lines.

In other earnings news, online brokerage TD Ameritrade Holding Corp., owned 40 per cent by TD Bank Financial Group (TSX:TD), says its third-quarter net income fell nearly 17 per cent to US$170.5, but the results exceeded Wall Street expectations.

The TSX financial sector was flat and TD shares were down 64 cents to $59.81.

The TSX energy sector lost 0.43 per cent as the August crude contract on the New York Mercantile Exchange rose 74 cents to US$64.72 a barrel. Suncor Inc. (TSX:SU) gained $1.01 to $36.20 while Canadian Natural Resources (TSX:CNQ) dropped $2.65 to $62.55.

In other corporate news, auto parts giant Magna International Inc. (TSX:MG.A) has confirmed it is revising its offer for the European operation of General Motors, Germany-based Adam Opel. Magna and Russia's Sberbank are now offering euro500 million, or about C$900 million, for a 55 per cent stake in Opel.

The two partners would each own 27.5 per cent. Magna shares gained $1.11 to $52.52.

Research In Motion Ltd. (TSX:RIM) said Monday that it has effectively been prevented from submitting an offer for the Nortel wireless business because of its desire to buy other Nortel assets as well.

Based on a preliminary review, RIM said it would be prepared to pay in the range of US$1.1 billion for the CDMA and Long Term Evolution Access businesses and certain other Nortel assets. Nokia Siemens has made a US$650-million offer for Nortel's wireless division. RIM shares were down $1.19 to $81.99.