TSX rally fizzles on Spanish debt fears

Fri Jul 20, 2012 5:06pm EDT
 
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By Jon Cook

TORONTO (Reuters) - Canadian stocks fell for the first time in more than a week on Friday, led lower by energy and financial shares, as oil slid and risk sentiment soured on worries that Spain would require a full-blown bailout.

Spain's main stock index suffered its biggest one-day drop in two years, and the risk premium on government debt hit a euro-era high at 7.32 percent after Spain's heavily indebted Valencia region asked for financial aid. <MKTS/GLOB>

"Europe continues to be dragged down by a lack of a solution," said Rick Meslin, head of Canadian equities at UBS Securities Canada.

Seven of Canada's 10 main sectors were lower. The powerhouse financial services subindex led declines, sliding 0.6 percent on the shaky euro zone outlook.

Losses were sharpest among the major banks, with Royal Bank of Canada (RY.TO: Quote) falling 0.5 percent to C$52.41, Bank of Nova Scotia (BNS.TO: Quote) down 0.9 percent at C$52.15, and Toronto-Dominion Bank (TD.TO: Quote) slipping 0.6 percent to C$80.

The heavily-weighted oil and gas patch fell 0.5 percent as U.S. August crude eased after hitting a two-month high on Thursday. <O/R>

Energy declines were led by Cenovus Energy (CVE.TO: Quote), which dropped 1.2 percent to C$32.54, Talisman Energy TLM.TO, off 1.9 percent at C$11.05, and Canadian Natural Resources (CNQ.TO: Quote), which edged down 0.7 percent to C$28.79.

The Canadian market has recently been boosted by a rebound in U.S. oil prices, which have risen steadily since falling below $80 a barrel last month.   Continued...

 
People walk past an electronic board displaying the midday TSX index in Toronto February 16, 2011. REUTERS/Mark Blinch