TORONTO (Reuters) - Canada's main stock index hit a July low on Tuesday, sliding with mining and energy shares, as growing fears about China's economy outweighed optimism that euro zone policymakers were taking steps to tackle the region's debt crisis.
Investors fretted about a hard landing for the world's second largest economy after data on Tuesday showed Chinese import growth slowed sharply in June to 6.3 percent, well short of the forecast for a 12.7-percent increase.
The news was not a good harbinger for China's first-half GDP data expected later this week.
"The data from China was rather disturbing," said Pat McHugh, Canadian equity strategist at Manulife Asset Management. "Imports declined by about half and export growth declined."
Canada's heavily-weighted materials sector, which includes miners, sank 2.7 percent. The equally influential oil and gas group slid 2 percent.
"We haven't really seen commodities do much of anything except slip," said McHugh.
The biggest drags on the market included: Barrick Gold (ABX.TO), off 2.6 percent at C$36.37; Goldcorp Inc (G.TO), which shed 2.1 percent to C$37.63, Potash Corp (POT.TO), fell 1.9 percent to C$44.97; Cenovus Energy (CVE.TO), down 2 percent at C$32.25, and Canadian Natural Resources (CNQ.TO), which dipped 1.8 percent to C$25.84.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE finished down 122.45 points, or 1 percent, at 11,512.22. The index at one point hit 11,492.36, its lowest since June 29.
Investors have been hoping the recently weak economic data in China and the United States would spur increased stimulus action from their central banks. Last week China cut interest rates for the second straight month.
On Tuesday, St. Louis Federal Reserve Bank President James Bullard told an audience in London that the U.S. economy is still some way from needing more asset-buying stimulus.
The China data overshadowed some progress in Europe's battle to control its debt crisis.
Spanish bond yields backed off the critical 7 percent level after euro zone finance ministers agreed to release the first 30 billion euros ($37 billion) of bailout funds for Spain's troubled lenders by the end of July.
Market watchers were also optimistic Germany's top court would ultimately approve the European Union's new permanent bailout fund, enabling a more flexible use of the latest rescue plan.
Canadian financial shares initially rose, but ended down 0.3 percent as euro zone efforts failed to assuage concerns about the region.
Losses were led by Bank of Nova Scotia (BNS.TO), down 0.9 percent at C$52.50, Canadian Imperial Bank of Commerce (CM.TO), which fell 0.7 percent to C$71.50, and Royal Bank of Canada (RY.TO), off 0.2 percent at C$52.48.
In the United States, Wall Street was hurt by some profit warnings from technology companies as second-quarter earnings season kicked off. Chipmakers Advanced Micro Devices AMD.N and Applied Materials Inc (AMAT.O) slashed their revenue outlooks due to weaker global demand. .N
With few companies reporting right now, McHugh said the negative initial results were likely to be exaggerated.
"Three weeks from now there's going to be a ton, so there will be lots of things to divert investors' attention."
Canada's far smaller technology sector dipped 2 percent. Research In Motion Ltd RIM.TO tumbled more than 4 percent to C$7.44 on Tuesday as the beleaguered maker of the BlackBerry held its annual shareholder meeting, with Chief Executive Thorsten Heins promising to turn RIM into a "lean, mean hunting machine.
RIM recently posted its first operating loss in eight years and has delayed the planned launch of the next-generation BlackBerry 10 until early next year.
"Their new BlackBerry 10 might be the best product known to man, but it can't come out fast enough to satisfy the consumer," said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services.
"RIM is going the way of the Betamax and the other technologies that could not catch up with the changing whims of technology."
Editing by Gary Crosse and Andrew Hay