TSX falls after Fed cools stimulus hopes
By Jon Cook
TORONTO (Reuters) - Canada's main stock index slid on Wednesday, led by mining and financial shares, as a slew of weak manufacturing reports raised global growth fears, but hopes of further stimulus measures from the U.S. Federal Reserve were unfulfilled.
The U.S. central bank dashed expectations among some investors by taking no new measures, while Fed officials acknowledged the American economy had "decelerated somewhat" from the last time the bank's policy committee met in June.
Risk assets have rallied lately and the S&P 500 .SPX .INX posted its biggest two-day percentage gain of the year to close out last week on increased expectations the Fed would engage in another round of bond-buying, or quantitative easing, to stimulate growth.
"U.S. stocks are trending higher so there is reluctance (for the Fed) to try to stand against the trend," said Fergal Smith, managing market strategist at Action Economics.
Canada's resource-heavy index was led lower by the heavily weighted materials sector, which fell 1.1 percent as gold and copper extended losses after the Fed statement. <GOL/> <MET/L>
The most influential decliners included Potash Corp (POT.TO: Quote), which fell 1.1 percent to C$43.92, Goldcorp Inc (G.TO: Quote), down 1.3 percent at C$35.74, Barrick Gold (ABX.TO: Quote), off 1 percent at C$32.68 and Kinross Gold (K.TO: Quote), which tumbled 4.4 percent to C$8.01.
Mining stocks were also hurt by weak manufacturing data -- at home and abroad -- that showed global demand weakened last month.
The euro zone's manufacturing sector contracted for the 11th straight month in July, while China's official factory purchasing managers' index fell to an eight-month low of 50.1 in July, suggesting the sector is barely growing. Continued...