TSX skids nearly 2 percent on Iamgold, U.S. fiscal woes

Wed Nov 14, 2012 6:01pm EST
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By John Tilak

TORONTO (Reuters) - Canada's main stock index tumbled nearly 2 percent to its lowest level since early September on Wednesday, hit by worries about U.S. budget negotiations and European debt, and by a big drop in miner Iamgold Corp (IMG.TO: Quote) after it reported weak results.

The market tracked a dramatic decline on Wall Street, where shares tumbled to late-July levels as investors grappled with the possible repercussions of the U.S. "fiscal cliff," a series of mandated tax hikes and spending cuts that start to take effect early next year. .N

The index's materials sector, which includes mining stocks, plunged 3.5 percent, with Iamgold down nearly 20 percent at C$11.98 after it reported lower-than-expected quarterly earnings on Tuesday and cut its production target for 2013.

Other heavyweight decliners were Barrick Gold (ABX.TO: Quote), down 3.8 percent at C$33.99, and Goldcorp (G.TO: Quote), off 3.8 percent at C$41.28.

Also holding the market's attention was the debt crisis in Europe, where there was a wave of strikes to protest spending cuts and tax hikes contained in austerity programs. <MKTS/GLOB>

Some investors expect focus will soon return to China, said Youssef Zohny, portfolio manager with Stenner Investment Partners, a unit of Richardson GMP.

"After the dust settles, investors are going to start to look at the economic fundamentals, especially at what's happening in China," he said. The policies that will be unveiled by China's new government will have a big impact on the resource-heavy Canadian market, he added.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended down 204.87 points, or 1.7 percent, at 11,929.79. Nine of the index's 10 sectors were lower. The consumer staples group rose 0.3 percent.   Continued...

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