Fed fears pull TSX lower; banks lead retreat

Fri Jun 14, 2013 5:11pm EDT
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By Peter N Henderson

TORONTO (Reuters) - Canada's main stock index retreated on Friday, ending its third-straight losing week as financials and materials stocks led a broad selloff.

Bank shares were the biggest drag on the index as investors digested U.S. economic data and fretted about a possible rollback in central bank stimulus programs.

The index fell following a sharp jump in the previous session and remained firmly in the red for the year.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended down 89.77 points, or 0.73 percent, at 12,187.36. Nine of the 10 TSX subgroups lost ground.

Financials, the index's most heavily weighted sector, lost 0.74 percent. Toronto-Dominion Bank(TD.TO: Quote) played the biggest role in leading the index lower, dropping 1.1 percent to $81.32. Royal Bank of Canada(RY.TO: Quote), the country's biggest lender, fell 0.94 percent, ending the week at C$59.99.

The materials sector, which includes mining stocks, declined 1.58 percent. The price of gold rose on Friday and ended the week above its Monday open, but gold-mining stocks still suffered. Goldcorp Inc. (G.TO: Quote) was down almost 2.5 percent at C$28.21, and Kinross Gold(K.TO: Quote) fell 3.1 percent to C$5.92. <GOL/>

"It seems that this market, when it gets a bit nervous, they go in and whack the financials and the materials," said David Cockfield, portfolio manager at Northland Wealth Management. "Gold is up but gold stocks are down. The market is continuing to exhibit all sort of characteristics that are less than rational."

U.S. producer prices rose more than expected in May as gasoline and food prices rebounded, but underlying inflation pressures remained muted, which could argue against an early scaling back of monetary stimulus by the U.S. Federal Reserve.   Continued...

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