TSX falls as commodity prices hit resource shares

Mon Sep 24, 2012 4:46pm EDT
 
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By Alastair Sharp

TORONTO (Reuters) - Canada's main equity index fell sharply on Monday, hurt by a drop in mining and energy companies as investor worries about signs of weak global growth pushed down commodity prices.

Oil, gold and copper prices all fell after German economic data disappointed markets and Spanish and Greek debt worries flared anew in the euro zone.

The Toronto index - almost half of which is focused on the extraction of natural resources - is now back at a level last seen more than a week ago just as the U.S. Federal Reserve's new stimulus measures lit a match under a string of commodities.

"I think we're getting to a point where a lot of the good news is built in, so we're looking for a bit of a pullback," said Levente Mady, a market strategist at Union Securities in Vancouver.

He said the outlook for commodity-related stocks is "iffy at best" and hugely reliant on growth in Chinese demand. "The Chinese stock market is at new three-year or four-year lows, that is not pretty," Mady said.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed 70.06 points, or 0.57 percent, lower at 12,313.54. That was its biggest single-day decline since late August.

Major gold miners Goldcorp Inc (G.TO: Quote) and Barrick Gold Corp (ABX.TO: Quote) were the two heaviest weights. Goldcorp was down 3.7 percent at C$44.08, and Barrick fell 2.8 percent to C$40.45 respectively.

Other drags included oil company Canadian Natural Resources Ltd (CNQ.TO: Quote), off 2.4 percent at C$31.48, and natural gas producer Encana Corp (ECA.TO: Quote), which slipped 2.5 percent to C$21.88.   Continued...

 
A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch