TSX hits December low on Europe debt fears

Mon Dec 12, 2011 5:22pm EST
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By Jon Cook

TORONTO (Reuters) - Stocks fell to their lowest point since the end of November on Monday as mining and energy issues slid along with declining optimism that last week's European Union deal would solve the region's financial crisis.

On Friday, all EU countries except Britain agreed to implement stricter budget rules and to provide up to 200 billion euros in bilateral loans to the International Monetary Fund to help tackle the crisis.

Many investors had hoped, in vain, that the deal would include plans by the European Central Bank to significantly increase its bond buying program to push down lending costs and help avoid a new recession in the euro zone.

"Part of this is trying to enforce the discipline of the market and getting people to do the thing that they should do and using the threat of the sloppy market to get them there," said Paul Hand, managing director at RBC Capital Markets. "And eventually, hopefully (they) do use the ECB."

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended down 126.86 points, or 1.1 percent, at 11,907.89, it's lowest close since November 29.

Eight of the index's 10 main sectors were negative, led by the heavily weighted materials sector, which fell 2.5 percent.

Miners Barrick Gold (ABX.TO: Quote), which fell 2.9 percent to C$49.23, and Goldcorp (G.TO: Quote), down 3.3 percent to C$49.52, led the sector's decline.

Bullion had its biggest one-day fall in nearly three months, sliding almost 3 percent as a lack of confidence in Europe pushed investors into the relative safety of the U.S. dollar.   Continued...