TSX hits two-week low on China worries

Thu Jul 12, 2012 5:09pm EDT
 
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By Jon Cook

TORONTO (Reuters) - Canadian stocks ended down after hitting a two-week low on Thursday, led by energy and mining shares, as investors worried about slower growth in top consumer China before a key Chinese economic report.

Investors will focus on data on China's second-quarter gross domestic product on Friday for indications of the health of the world's second-largest economy. Recent economic reports have pointed to China's expansion losing steam.

A Reuters poll showed economists expect China's growth to have slowed to 7.6 percent, its worst performance since the 2008-2009 financial crisis.

"The Canadian markets today are clearly a reflection of the concerns around what's going to come out of tomorrow's report from China," Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, Missouri.

Nearly all of Canada's 10 main sectors fell. The lion's share of the drop came from the heavyweight energy and materials groups, which both declined more than 1 percent.

The biggest decliners included Suncor Energy (SU.TO: Quote), down 1.4 percent at C$28.85, Cenovus Energy (CVE.TO: Quote), which slid 2.1 percent to C$32.57, Barrick Gold (ABX.TO: Quote), down 1.4 percent at C$35.17, Potash Corp (POT.TO: Quote), which slumped 1.2 percent to C$44.75, and First Quantum Minerals (FM.TO: Quote), off 4.4 percent at C$17.06.

Markets also were disappointed by prospects for new stimulus measures in the United States. Minutes of the Federal Reserve's June meeting, released on Wednesday, showed that the fragile recovery might need to weaken further before policymakers take more action.

"We saw the same type of reaction when the markets were hoping for QE2, which they ultimately got," said Fehr. "The fact that they aren't quick to do it indicates that the economy isn't as bad as some might be expecting."   Continued...