March 29, 2012 / 1:37 PM / in 5 years

TSX hits 11-week low on weak banks, energy

A Bay Street sign is seen at the financial district in Toronto, October 10, 2008.Mark Blinch (CANADA)

TORONTO (Reuters) - Canadian stocks fell to a near 11-week low on Thursday as energy issues skidded on weak oil prices and U.S. jobless data fueled worries about the pace of global economic recovery.

The hefty energy sector, which makes up nearly a quarter of the broader index, sank nearly 1.0 percent as oil prices fell for a third straight session on growing talk of a release of strategic petroleum reserves by consumer nations spurred profit-taking.

U.S. natural gas futures tumbled on Thursday, with the front-month contract ending at a 10-year low as mild weather and bearish inventory and production data undercut prices. <O/R> <NGA/US>

Canadian Natural Resources CNQ.TO fell 1.1 percent to C$32.46 and Talisman TLM.TO sank 2.1 percent to C$12.39. Encana (ECA.TO) shed 2.2 percent to C$19.70.

"It's not really a surprise when you see the pressure on the natural gas side and crude oil," Jennifer Dowty, portfolio manager at Manulife Asset Management, said of the drop in the energy complex.

U.S. economic data was also a key factor weighing on global equities, money managers said.

New U.S. claims for jobless benefits fell slightly last week, but missed forecasts of a greater decline, while the prior week's number was revised up. After a period of improvement, some investors said the jobs numbers showed worrisome signs of stalling.

That followed a U.S. durable goods report on Wednesday that was slightly softer than expected, casting doubt about the health of the world's biggest economy.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE finished the day down 74.50 points, or 0.6 percent, to 12,339.36, with all of its 10 main sectors lower. The index touched 12,194.53, its weakest level since January 13.

The index was down 1 percent for the week, but notched a 3.2 percent gain for the quarter.

Dowty also said it's not surprising to see stocks falter given the run-up so far this year. "We're at quarter end. I think there's some profit-taking," she said.

Other big names on the downside included Royal Bank of Canada (RY.TO), down 1.4 percent at C$57.98, and Toronto-Dominion Bank (TD.TO), which fell 0.8 percent to C$84.39. Potash Corp (POT.TO) was lower by 2.4 percent at C$44.96.

Fear about a slowdown in Asia also drove the market lower, said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

"Canada has been out of favor for a while. Until people have confidence in what's going on in China, it'll probably continue to lag the U.S. markets and other markets," he said. Resource stocks make up some 40 percent of the broader TSX index.

But the retreat isn't expected to last for long.

Canadian share prices are expected to march higher in 2012 as resource and financial stocks get a boost from the calming of the European debt crisis and further signs of economic recovery in North America, a Reuters poll of analysts showed on Thursday. <EPOLL/CA>

In company news, Encana Corp (ECA.TO), among the most heavily-traded stocks on the broader TSX, will take a final decision on the Kitimat LNG joint venture before the end of 2012, its chief executive officer said on Thursday, with the project's partners willing to offer up to 20 percent of the equity to potential gas buyers.

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