TSX ends lower as Cyprus concerns weigh

Tue Mar 19, 2013 5:19pm EDT
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By John Tilak

TORONTO (Reuters) - Canada's main stock index closed slightly lower on Tuesday, hurt by widespread declines in the materials, energy and financial sectors, after a crucial vote in Cyprus threatened to push the country into default.

Worries that Cyprus will reignite Europe's debt crisis took a toll on oil prices, which slumped to a three-month low and were a drag on the energy sector. <O/R>

Cyprus's parliament overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout. The rejection threw euro zone efforts to rescue the latest casualty of the currency area's debt crisis into disarray. <MKTS/GLOB>

"The news from Cyprus is bringing Europe back to the forefront in investors' minds," said Youssef Zohny, portfolio manager at Stenner Investment Partners, a unit of Richardson GMP. "There's some headline risk coming out of Europe."

Zohny said his concern was the economic situation in Cyprus could give investors an excuse to sell.

The developments from the island revived broader concerns about the euro zone economies and got some analysts talking about spillover consequences.

"The long-term repercussions are very, very serious," said Gavin Graham, president at Graham Investment Strategy. "Canadian investors should be concerned about the knock-on effects (on the euro zone)."

However, supporting the market was data that showed groundbreakings for U.S. homes rose in February and that new permits for construction climbed to the highest level since 2008, a sign the housing recovery there is gathering steam.   Continued...

A sign shows TSX information in Toronto September 15, 2008. REUTERS/Mark Blinch