TSX hits two-week low on Fed worries; CP Rail dips
By John Tilak
TORONTO (Reuters) - Canada's main stock index fell on Tuesday to a two-week low, hurt by declines in Canadian Pacific Railway Ltd (CP.TO: Quote) and Barrick Gold Corp (ABX.TO: Quote) as well as concerns that the U.S. Federal Reserve might taper its stimulus program.
RBC Capital Markets cut its rating on CP Rail, a day after activist investor Pershing Square Capital Management said it would sell nearly one-third of its roughly 14 percent stake in the company. CP shares tumbled 2.8 percent.
The market was further weakened as declines in the price of bullion, which fell on concerns about demand in India, pulled shares of gold producers lower. <GOL/>
But rising oil prices, fueled by rumors that South Korea would create new incentives for refiners to import crude, boosted energy companies and kept losses in check. <O/R>
Speculation that the U.S. central bank might taper off its bond buying is the single biggest source of market volatility, said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.
"The Fed is even now talking about taking the punch bowl away," he added. "It's going to be quite a challenge for the market to grapple with that."
"We're seeing increased sensitivity to this sort of talk in recent weeks, and we suspect that the volatility is going to continue."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 15.83 points, or 0.13 percent, at 12,593.97, falling earlier to 12,568.94, its lowest since May 17. Continued...