TSX down as Europe recession fears weigh

Mon Nov 14, 2011 11:39am EST
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By Jon Cook

TORONTO (Reuters) - Toronto's main stock index was down slightly in choppy trade on Monday as fears that Europe would fall back into recession weakened commodity prices and halted momentum from Friday's gains.

Industrial production in the European Union's 17-country bloc fell 2 percent in September from August, overshadowing hopes that new leaders in Italy and Greece would prevent their economies from collapsing and avoid financial meltdown.

"We're a long long way from any sort of resolution there," said Michael Sprung, president of Sprung & Co Investment Counsel. "This week, we're likely to see very reactionary markets, very volatile."

Fears that Italy would not be unable to repay its near 2 trillion euro debt ($2.7 trillion) resumed after a weak sale of Italian five-year bonds and after its 10-year bond yields rose closer to the 7-percent level, which had triggered previous euro zone bailouts for Ireland, Portugal and Greece.

At 11:30 a.m., The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 22.93 points, or 0.2 percent, at 12,253.92 after briefly touching a session high of 12,342.03.

Half of the TSX's 10 main sectors were lower, led by the heavily weighted materials sector, which fell 0.5 percent as gold and commodity prices dipped.

Barrick Gold Corp (ABX.TO: Quote) was the sector's biggest drag, falling 0.8 percent to C$53.27.

Energy issues fell 0.5 percent as oil prices were hit by the EU's slowdown in production.   Continued...