TSX drops as Barrick leads golds lower; Valeant weighs
By Alastair Sharp
TORONTO (Reuters) - Canada's main stock index fell on Thursday from two-year highs hit a day earlier, as gold stocks sank and negative earnings surprises weighed.
Barrick Gold Corp (ABX.TO: Quote) fell 5.9 percent to C$20.28 after the world's top gold producer said it was suspending construction of a massive project in South America.
"Without this mine being fully developed it will not be a future source of production, so that's going to impact the financial estimates in terms of cash flows and obviously impact people's net asset valuations of the company," said Gareth Watson, vice president of investment management and research at Richardson GMP.
Regulators halted construction on the Chilean side of the Pascua-Lama project last spring, citing serious environmental violations, while unionized Chilean workers have also threatened to strike.
"It's a double-edged sword. They can stop the bleeding temporarily, and on the other side, send a message to the Chilean government," said John Kinsey, portfolio manager at Caldwell Securities. "They are saying 'enough is enough,' and I think it is a good thing."
The TSX materials subgroup, which includes precious and base metals producers, slid 3 percent. All but one of the ten TSX subgroups ended lower.