The Toronto stock market was lower Thursday despite solid earnings and dividend hikes from three big Canadian banks as positive U.S. economic news raised doubts about whether the Federal Reserve will take more measures to boost growth.The S&P/TSX composite index was down 34.98 points to 11,974.81 and the TSX Venture Exchange dipped 5.51 points to 1,223.65.The Canadian dollar was down 0.12 of a cent at 100.94 cents US.U.S. markets were lower after U.S. retailers reported strong sales gains for August. Target, Costco Wholesale and Limited Brands all reported results that beat estimates.Meanwhile, the U.S. Commerce Department reported that consumer spending rose 0.4 per cent in July, the best showing in five months.The Dow Jones industrials dropped 64.61 points to 13,042.87. The Nasdaq composite index declined 19.52 points to 3,061.67 and the S&P 500 index was off 7.74 points at 1,402.75.Thursday’s positive data followed the release of the Fed’s latest regional survey Wednesday, which showed the pace of economic growth expanding. It also pointed to rising retail sales and loan demand, while housing markets showed signs of improvement across most areas.Another report Wednesday showed the U.S. economy grew faster than earlier reported in the April-June quarter, at a 1.7 per cent annual pace.The data served to raise uncertainty over whether Fed chairman Ben Bernanke would use a much-anticipated speech Friday to hint at further stimulus measures.The TSX found limited support from the financial sector in the wake of reports from Royal Bank (TSX:RY), TD Bank (TSX:TD) and CIBC (TSX:CM).Royal Bank’s earnings grew to $2.24 billion or $1.47 per share, partly on strength in its Canadian consumer banking operations, from $1.29 billion a year ago. Excluding certain items, the bank earned $1.31 a share in the quarter against analyst estimates of $1.18.RBC also raised its quarterly dividend by five per cent to 60 cents per share and its stock rose 71 cents to US$55.31 .TD Bank’s quarterly net income rose to $1.7 billion, or $1.78 per share, from $1.49 billion a year ago. After adjustments, the bank’s net income was $1.82 billion or $1.91 per diluted share, seven cents better than estimates.TD also upped its dividend, which will rise five cents to 77 cents, but its stock lost 54 cents to $80.98.CIBC shares also backed off, down 16 cents at $76.22, despite a big increase in net income in the quarter ended July 31 to $841 million from $591 million for the same period last year. Excluding one-time items, the bank earned $2.06 a share, a dime better than forecast.CIBC also announced a quarterly dividend increase of four cents a share.National Bank (TSX:NA) is scheduled to report its results after markets close and its shares declined 57 cents to $75.36.Bank of Montreal (TSX:BMO) and Scotiabank (TSX:BNS) both handed in earnings Tuesday which also beat expectations.All in all, Canada’s five biggest banks racked up $7.8 billion in profit in the third quarter, up 45 per cent from a year ago.And Scotiabank announced after the market close Wednesday that it had reached an agreement to buy ING Bank of Canada from Netherlands-based parent ING Group for $3.13 billion in cash.Scotiabank also announced a public offering of 29 million common shares at $52 — for gross proceeds of $1.5 billion — to fund the acquisition. Its shares fell $1.25 to $52.35.Hopes for further Fed stimulus had grown since the release of minutes from the Fed’s last interest rate meeting Aug. 1 which showed a growing number of members wanting to inject another round of stimulus into a weakening economy.But economic data released since then, including better than expected job creation in July, rising retail sales and a recovering housing sector, actually point to a strengthening economy, meaning the Fed could find it hard to justify more easing, analysts say.The Fed makes its next interest rate announcement Sept. 14.Elsewhere on the TSX, base metal stocks led decliners even as September copper rose three cents to US$3.47 a pound following four days of losses.Major Drilling Group International (TSX:MDI) tumbled $1.42 or 13.22 per cent to C$9.32, while Teck Resources (TSX:TCK.B) declined 87 cents to $27.62.The energy sector was down 0.5 per cent with the October crude contract down 33 cents at US$95.16 a barrel. Suncor Energy (TSX:SU) fell 27 cents to C$30.84 while Cenovus Energy (TSX:CVE) gained 36 cents to $32.60.The gold sector was ahead 0.5 per cent as bullion edged $1.90 higher to US$1,664.90 an ounce. Goldcorp Inc. (TSX:G) rose 49 cents to C$39.75.Equally important to what the Fed may do is the next interest rate announcement by the European Central Bank on Sept. 6. Gains on markets in August have also been anchored in hopes that the ECB will take steps to control high borrowing costs that have bedevilled the weakest members of the eurozone, including Spain.Spain’s financial problems increased Thursday as Valencia, one of its cash-strapped regions, said it would have to tap a central government rescue fund for C4.5 billion, a billion more than previously planned, to help it handle its debt.The announcement reignited market fears over whether Spain will need a full bailout.The interest rate demanded by investors for key 10-year bonds on the secondary market, where issued bonds are traded freely, rose 0.12 percentage points Thursday to 6.55 per cent. Although lower than a month ago, the rate is edging closer to a level that is considered unsustainable in the long term.European bourses headed lower as London’s FTSE 100 index moved down 0.2 per cent, Frankfurt’s DAX lost 0.82 and the Paris CAC 40 declined 0.21 per cent.