TSX snaps three-day losing streak, investors eye Fed

Tue Jan 28, 2014 4:48pm EST
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By John Tilak

TORONTO (Reuters) - Canada's main stock index recovered on Tuesday, snapping a three-day losing streak, as investors eyed a Federal Reserve meeting for signs of a further scaling-back of the U.S. central bank's monetary stimulus.

Fears about China's economic growth outlook and another possible move by the Fed to trim its bond-buying program have weighed on investor sentiment since last week. Further, recent sharp drops in emerging market currencies, such as the Argentine peso and Turkish lira, threw global markets into disarray.

Global markets remained jittery ahead of any signal from the Fed as well as a decision by Turkey's central bank as to whether to raise interest rates in an attempt to stabilize the currency.

After a solid rebound in the second half of 2013 and a promising start to the current year, the Toronto index recorded two of its biggest single-day drops in recent months in the previous two sessions.

Despite Tuesday's gains, some market analysts were cautious.

"We may get a bounce today, but overall the market is on a downward trend," said Marcus Xu, portfolio manager at MY Capital Management Corp in Vancouver. "The biggest risk is the emerging markets."

"Everybody wants to be safe and nobody wants to stick their neck out," he added. Investors "want to be away from risky assets just for the time being."

Xu, who says that this year will be a lot more volatile than 2013, expects the TSX to outperform the S&P 500 .SPX index.   Continued...

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