TORONTO (Reuters) - Canadian stocks edged higher on Tuesday as gold miners gained on rising bullion prices, with weak U.S. growth data and persistent fears about a European slowdown spurring investors to seek a safe haven.
Canadian stocks avoided a fourth straight day of declines as the gold price gained more than 1 percent after hitting a four-week low on Monday and falling nearly 5 percent over the last two weeks.
“November and December are generally positive months for gold stocks and we are seeing that effect right now,” said Sid Mokhtari, market technician and executive director, institutional equity research, CIBC World Markets.
“It’s a good chunk of the TSX so it does help.”
Gold’s rally helped lift the heavily weighted materials sector, home to gold mining stocks, up 1.5 percent.
Barrick Gold (ABX.TO) led the gains in the sector and broader market, climbing 2.2 percent to C$50.98.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE finished up 10.47 points, or 0.1 percent, at 11,795.19, after hitting a session low of 11,730.64.
The TSX was down for much of the day, pulled lower by U.S. gross domestic product data that showed the economy grew at a 2 percent annual rate in the last quarter, down from a previous estimate of 2.5 percent.
Also dragging on stocks was a tenuous European debt picture, as rising bond yields for Italy, Spain, France and Belgium added to investor concerns that the euro zone is headed into a recession.
The International Monetary Fund responded by unveiling a new six-month liquidity line, but investors were still hoping for a broader euro zone bailout initiated by the European Central Bank.
“The market seems to be demanding strong action out of the European leaders,” said Barry Schwartz, a portfolio manager at Baskin Financial Services. “We thought we covered this with the Greece debacle and here we are again and now we need the ECB to step up and become a lender of last resort. Does that solve the problem? I don’t know.”
Half of the Toronto index’s 10 main sectors were lower with energy stocks the biggest drag, falling nearly 1 percent, despite higher oil prices.
Suncor Energy (SU.TO) led the sector’s declines, dropping 1.7 percent to C$30.42.
Schwartz said the decline was likely a case of investors being scared by the specter of another possible financial collapse initiated by Europe’s inability to get control of its debt woes.
“Sure oil can be at $96 and gold can be at $1,700, but if you believe it’s going to hit the fan, it’s going to go down and go down quick,” Schwartz added.
In individual company news, Kinross Gold Corp (K.TO) shares spiked 5.8 percent to C$13.62 after a senior Ecuadorean mining official told Reuters the country is close to signing contracts with the Canadian gold and copper miner for two large mining projects with investment of $3 billion.
Additional reporting by Jennifer Kwan; Editing by Jeffrey Hodgson