TSX lower as Nexen, Progress dampen mining gains
By Solarina Ho
TORONTO (Reuters) - Canada's main stock index finished Monday's session slightly lower as the government's rejection of a foreign takeover bid for Progress Energy Resources Corp (PRQ.TO: Quote) vibrated through the energy sector, overshadowing gains in mining shares.
Oil and gas shares, which make up about 25 percent of the index, dominated the decliners after the government blocked Malaysian state oil firm Petronas's C$5.17 billion bid for Progress.
The index's energy group slid 1.43 percent, with all five top decliners in that sector.
Progress, which was also hit by a number of cuts by analysts in their share-price targets, sank 9.28 percent to C$19.64. Earlier, it dropped as low as C$18.78, or 13.26 percent.
"Are they (the Canadian government) saying the free market system is closed in Canada or are they going to come up with a better course of action?" asked Barry Schwartz, vice president and portfolio manager at Baskin Financial Services.
"This is a great lesson for investors: never buy stocks based on its takeover premium or takeover potential."
The surprise move blocking of the deal could be a harbinger of the government's attitude toward a C$15.1 billion offer by state-owned Chinese company CNOOC for oil producer Nexen Inc NXY.TO. Nexen was one of the most heavily weighted decliners on the index on Monday, falling 4.41 percent to C$24.04.
"The Nexen deal is a different cup of tea. But if I were one of the Nexen shareholders, I'd be a bit more nervous this morning than I was last week," said Levente Mady, vice president and senior portfolio manager at PI Financial Corp. Continued...