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TORONTO (Reuters) - Canada's main stock index fell more than 1 percent on Wednesday, hurt by sluggish economic data from China that yanked commodity prices lower and by weak earnings reports from some of the country's biggest companies.
Growth in the manufacturing sector in China, a big consumer of commodities from Canada, slowed unexpectedly in April as new export orders fell, raising fresh doubts about the strength of that economy after a disappointing first quarter.
The market also reacted nervously to the U.S. Federal Reserve's move to keep buying $85 billion in bonds each month to keep interest rates low and spur growth.
Offsetting some of the weakness was a gain in shares of coffee-shop chain Tim Hortons Inc THI.TO after an activist shareholder called for changes in the way the company is run, and a rise in grocery-chain Loblaw Cos Ltd's (L.TO) stock after the company reported first-quarter results.
The Toronto index, which recorded its second-biggest percentage jump of the year thus far on Tuesday, gave up most of those gains on Wednesday and slipped back into negative territory for the year.
"The Fed statement was fairly ambiguous for most investors," said Youssef Zohny, portfolio manager at Stenner Investment Partners, a unit of Richardson GMP. "It seems like investors are pretty disappointed."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 135.21 points, or 1.09 percent, at 12,321.29. The TSX index is badly lagging the U.S. S&P 500 .SPX index, which is up about 12 percent on the year.
"The TSX has some catching up to do with the global markets," Zohny said. "There could be relative outperformance if we see some stability in commodities and the economic data."
Eight of the 10 main sectors on the index were in the red on Wednesday, with the materials sector, which includes mining stocks, declining 2 percent.
Cameco Corp (CCO.TO) gave back 0.5 percent after the uranium producer siad its profit plunged 93 percent in the first quarter as uranium sales fell and prices were weaker.
Miner Yamana Gold Inc (YRI.TO) fell 6.5 percent to C$11.66 after it reported a 40 percent drop in first-quarter profit late on Tuesday, hurt by lower gold prices and higher costs.
"Their results were lousy," John Ing, president of Maison Placements Canada, said of Yamana's first-quarter performance. "Higher costs were definitely a factor, but they were disappointing."
Ing said the lower bullion price was hurting gold miners, which have lost about 35 percent of their market value since the start of the year. The price of bullion fell more than 1 percent on Wednesday, hit by holidays in China and parts of Europe, which slowed gold buying. <GOL/>
Energy shares gave back 2 percent as oil prices slipped. <O/R> Among them, Suncor Energy Inc (SU.TO) shed 2.7 percent and played the biggest role of any single stock in leading the index lower.
Talisman Energy Inc's TLM.TO shares fell 4.8 percent after the oil and gas company posted a quarterly loss as the sale of some North Sea assets hurt production.
Financials, the index's weightiest sector, declined 0.5 percent.
Tim Hortons is facing pressure from a U.S. hedge fund to boost returns aggressively through debt-funded share buybacks and a scaling back of U.S. expansion plans, according to documents seen by Reuters and two sources familiar with the matter.
Shares of Loblaw jumped 4.7 percent to C$44.75 after it reported a 40 percent increase in first-quarter profit and said it plans to compete an initial public offering of its real estate investment trust in early to mid-July.
Editing by Nick Zieminski; and Peter Galloway