5 Min Read
TORONTO (Reuters) - Canadian stocks fell for the third straight session on Tuesday, led by energy and financial shares, as uncertainty about Greece and Spain heightened euro zone debt worries, overshadowing solid earnings from telecoms leader Rogers Communications Inc (RCIb.TO).
Concerns about the euro zone focused on Spain's high borrowing costs as the country paid the second-highest yield on short-term debt since the 1999 launch of the euro. European Union officials said Greece had little hope of meeting the terms of its bailout.
Weak manufacturing data, the threat of a credit ratings downgrade for Germany and disappointing second-quarter results from Deutsche Bank AG (DBKGn.DE) added to the euro zone malaise.
"It's Europe, Europe, Europe and it doesn't really matter what the story is right now," said Paul Hand, managing director at RBC Capital Markets.
Nine of Canada's 10 main sectors finished lower. The heavyweight energy complex led losses, falling 1.8 percent a day after rising more than 2 percent in the wake of Nexen Inc's NXY.TO $15-billion takeover offer by China's state-owned oil company CNOOC (0883.HK).
The Nexen deal - China's richest foreign takeover bid yet - must still be approved by the Canadian government. On Tuesday, Prime Minister Stephen Harper told reporters: "Nobody should prejudge the government's position. This investment will be thoroughly scrutinized before it is either accepted or rejected.
The biggest energy decliners included Canadian Natural Resources (CNQ.TO), down 3.9 percent to C$27.67, Suncor Energy (SU.TO), which slid 1.8 percent to C$29.76, Cenovus Energy (CVE.TO), off 3.5 percent at C$32.10, and Encana Corp (ECA.TO), down 3.5 percent at C$20.77.
"You had many of them up yesterday, probably unwarranted, in the context of takeovers," said Hand. "There's probably more of a corrective action in the oils."
Canadian financials sank 0.8 percent on the euro zone worry. Declines were led by Toronto-Dominion Bank (TD.TO), which slid 0.8 percent to C$78.43, Bank of Nova Scotia (BNS.TO), down 0.5 percent at C$51.15, and Sun Life Financial (SLF.TO), falling 2.7 percent to C$20.26.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 78.59 points, or 0.7 percent, at 11,466.95. The index retreated more than 100 points after touching a session high at 11,577.63.
Equities were also pressured by lowered 2012 U.S. profit forecasts, including United Parcel Service (UPS.N), the world's largest package delivery company. U.S. data also showed manufacturing expanded at its slowest pace since late 2010.
"Right now there's overwhelming concern about a global slowdown," said Michael Simpson, senior portfolio manager at Sentry Select Capital Corp.
The safe-haven telecommunications sub-index led gains, rising 1.4 percent after earnings from Rogers Communications, Canada's largest mobile phone company, beat expectations.
Rogers Communications shares jumped almost 5 percent to C$39.01 after it reported higher adjusted earnings on Tuesday as profit margins rose in its cellular phone business even as competition picked up.
"Rogers shares were strong," said Simpson. "There's going to be volatility in the market, so you look for companies that have the ability to pay a dividend and those special breed that can raise their dividend."
Shares of telecom rival BCE Inc (BCE.TO) also rose, climbing 1.2 percent to C$41.79.
In other positive news, Eldorado Gold Corp (ELD.TO) jumped 4 percent to C$10.36 after a Greek court revoked an order that temporarily stopped work at the Canadian company's gold mining project in the north of Greece, Eldorado said on Tuesday.
Editing by Chizu Nomiyama and James Dalgleish