China growth worry hits commodity-heavy TSX

Fri Jun 8, 2012 5:32pm EDT
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By Cameron French

TORONTO (Reuters) - Canada's main stock index fell on Friday, diverging from rising U.S. equities, as fears about Chinese economic growth hit commodity issues, while weak jobs data prompted investors to take a cautious stance heading into the weekend.

Financial and energy issues led the drop, but the weakness was broad with all but one subgroup of the benchmark TSX index retreating on the day.

"There's a little bit of speculation out there that the Bank of China rate cut (on Thursday) was a precursor to what could be weaker-than-expected economic data that they're going to report," said Craig Fehr, a Canadian market strategy at Edward Jones

Canada's employment report for May on Friday only narrowly missed market estimates with a tepid 7,700 jobs gain, but the data did little to ease investor nervousness about both global growth and the deepening debt crisis in Europe.

Concerns about Chinese demand and the continuing euro zone jitters ate into oil prices, pulling the heavily-weighted TSX energy index down 1.4 percent. Base metals prices also fell.

Among oil companies, Nexen Inc NXY.TO dropped 2.0 percent to C$16.39, while Husky Energy (HSE.TO: Quote) retreated 1.4 percent to C$23.83.

Copper miner Inmet Mining IMN.TO led base metals miners lower, dropping 4.0 percent to C$43.41, but the index's materials sector ended the session up 0.1 percent as gold-mining stocks were boosted by a late-session rally in the precious metal.

Kinross Gold (K.TO: Quote) rose 2.5 percent to C$8.51, while Iamgold Corp (IMG.TO: Quote) gained 1.4 percent to C$12.44.   Continued...

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch