TSX tumbles on euro worries, Fed statement

Tue Dec 13, 2011 5:20pm EST
 
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By Jon Cook

(Reuters) - The TSX fell more than 1 percent on Tuesday, after the U.S. Federal Reserve pointed to turmoil in Europe as a big risk to economic growth, but left interest rates unchanged and said there would be no new stimulus.

The Fed left the door open for further quantitative easing measures should U.S. economic growth slow further, but that failed to impress investors.

"Some would argue that we can't get QE at this point because we haven't suffered enough pain yet, which means we could be revisiting pain before we get gains," said Sid Mokhtari, market technician and director, institutional equity research, at CIBC World Markets.

The TSX dropped more than 100 points within 30 minutes of the announcement by the U.S. central bank as a sharp retreat by gold prices hit mining issues.

"It had a negative effect, but the market was trending down anyways this morning because of gold breaking down," said Sal Masionis, a stockbroker at Brant Securities.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 147.95 points, or 1.24 percent, at 11,759.94.

The subindex of gold mining stocks fell nearly 3 percent, as bullion slid about 2.5 percent on Tuesday, posting its largest two-day loss in almost three months.

Goldcorp (G.TO: Quote), down 2.9 percent to C$48.10, and Barrick Gold (ABX.TO: Quote), which dropped 1.9 percent to C$48.29, were among the hardest hit miners.   Continued...