TSX falls as euro zone fears hit miners, banks

Wed Nov 16, 2011 5:28pm EST
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By Jon Cook

TORONTO (Reuters) - Toronto's main stock market index closed lower on Wednesday as a new wave of fears about Europe's debt crisis hurt miners and banking shares, offsetting gains in the oil and gas sector.

Anxiety over Europe washed over markets again as the European Central Bank's buying of Italian and Spanish bonds failed to stem a broad euro-zone bond selloff. In France, yield premiums on the 10-year government bond over German bunds hit euro-era highs.

A Fitch Ratings report said U.S. banks could be greatly affected if "contagion continues to spread beyond the stressed European markets.

"It's fair to say that deeper debt contagion would have a large impact on the broader global financial system and U.S. banks would not escape the trouble unscathed," said Gareth Watson, vice president of investment management and research at Richardson GMP Ltd.

Gold-mining stocks fell 1.4 percent as the euro-zone jitters pushed bullion to its biggest one-day drop this month.<GOL/>

Barrick Gold (ABX.TO: Quote) was the biggest drag, falling 1.5 percent to C$52.65. Minefinders Corp's MFL.TO shares plunged more than 10 percent to C$12.46 after downgrades.

Bucking the gold miners' downward trend, shares of Novagold (NG.TO: Quote) rose 24 percent to C$11.13 after the company said it is exploring a possible sale of its 50 percent stake in the big Galore Creek copper/gold project in northwestern British Columbia.

Though widely viewed as a safe-haven, gold has recently traded in line with headlines from Europe and was down with fears the European debt crisis is broadening and could engulf the economies of Austria, the Netherlands and France.   Continued...