TSX slips as geopolitical, economic fears resurface

Wed Jul 3, 2013 5:30pm EDT
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By John Tilak

TORONTO (Reuters) - Canada's main stock index dropped in volatile trading on Wednesday as political turmoil in Portugal and Egypt coupled with sluggish data out of China to stoke investor worries about the global economic recovery.

Higher bullion prices pushed up gold stocks and crude oil prices shot up on Middle East tensions, but failed to provide much support to energy shares, which edged higher. <GOL/> <O/R>

Investors had much to process on Wednesday as Egypt's armed forces overthrew elected President Mohamed Mursi and announced a political transition with the support of a wide range of leaders.

Meanwhile, political turmoil in Portugal drove Lisbon's bourse to its worst day in three years and threatened to reignite the euro zone crisis.

Also on Wednesday, data showed China's services sector expanded only modestly in June with the vast construction industry acting as a drag on growth, a further sign that the world's second-largest economy is losing momentum.

The resources-heavy Canadian market's dependence on the global economy because of the commodities it exports makes it vulnerable to any such bumps on the road.

"It's a combination of geopolitical and macroeconomic uncertainty," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver. "That is weighing on the TSX because the index is a proxy for global growth."

The market is also awaiting the influential U.S. nonfarm payrolls report on Friday.   Continued...

A sign displays TSX information in Toronto October 6, 2008. REUTERS/Mark Blinch