Canadian stocks seen making 9 percent loss in 2011

Thu Sep 29, 2011 1:13pm EDT
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By Andrea Hopkins

TORONTO (Reuters) - Canadian stocks are expected to rise modestly from current levels but end 2011 down from a year earlier as troubles in Europe, worries about U.S. growth and lower commodity prices weigh, a Reuters poll found.

The forecast for Canada's main stock index also suggests only minor gains in early 2012 as global woes persist, continuing the trend of meager growth compared to the impressive double-digit returns of the last two years.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE, has fallen about 14 percent this year and at one point was more than 20 percent down from its high in March.

It is seen ending 2011 9.2 percent lower at 12,200, according to the median forecast of 24 analysts and fund managers in a poll taken over the past week.

That is well below the median end-2011 target of 13,775 in a June poll, and would mark a sharp slowdown compared to the 14 percent advance for the TSX in 2010, and nearly 31 percent gain in 2009.

"Global recession fears have intensified in the third quarter, as the U.S. recovery stumbles and the European crisis threatens growth in the region," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.

"With the TSX skirting official bear market territory, we are cutting our end-2011 and mid-2012 forecasts by 1,000 points and 1,250 points respectively, based on our view that earnings estimates are still too high and will need to come down significantly."

The common definition of a bear market is a pullback of 20 percent.   Continued...

<p>People walk by a Bay Street sign at the financial district in Toronto in this October 10, 2008 file photo. REUTERS/Mark Blinch</p>