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TORONTO (Reuters) - The TSX closed down on Monday as mining issues sagged on lower metal prices and euro zone debt worries stoked investor fears of a slowdown in global demand.
Materials issues led the fall, dropping 2.2 percent as gold and base metal prices slid on worries of softening demand from China, and concerns mounted that the European debt crisis will hurt global growth.
"I think everybody has just thrown up their hands and said 'we're out of here'," said Barry Schwartz, vice-president and portfolio manager at Baskin Financial Services.
"Until we see a nice rebound in the price of metal commodities - I would expect the stocks to be directionless."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 95.68 points, or 0.82 percent, at 11,539.70.
Top base metal producer Teck Resources TCKb.TO slid 2.76 percent to C$34.21 and Ivanhoe Mines (IVN.TO) - which is building the massive Oyu Tolgoi copper-gold mine in Mongolia - fell 4.78 percent to C$16.54.
Barrick Gold (ABX.TO), the world's top gold producer, fell 0.75 percent to C$46.30, while Eldorado Gold (ELD.TO) was the biggest drag, skidding 12.54 percent to C$13.46, as the mid-tier gold miner entered into a C$2.5 billion ($2.4 billion) all-stock deal to buy European Goldfields.
While U.S. crude futures settled higher on worries over protests in Kazakhstan and sanctions against Iran, energy issues weighed on the TSX, falling 1.43 percent.
"Essentially, the price of oil is back where it was at the beginning of the year, yet the stocks of companies like Suncor, CNQ (Canadian National Resources) and Talisman are all off," said Schwartz. "It tells you, in the short period, the stock market has nothing to do with fundamentals and everything to do with emotion."
Canadian Natural Resources (CNQ.TO) fell 2.71 percent to C$35.12, while Cenovus Energy (CVE.TO) was down 1.44 percent at C$31.39 and Encana Corp (ECA.TO) dropped 2.47 percent to C$18.56. Talisman Energy TLM.TO slid slightly to C$11.75.
Fears of sovereign downgrades over the euro zone debt crisis also had investors buying up safe-haven U.S. government bonds as they tried to polish portfolios before year's end.
Meanwhile, European finance ministers agreed to pursue plans to press for tighter fiscal rules in an attempt to assuage doubts they can overcome their financial crisis.
With the holiday season fast approaching, investors are eyeing 2012 with hopes that the new year will bring a recovery in equity markets, but analysts warned that the TSX is not out of the rough just yet.
"We could have a bumpy first half of the year," said Myles Zyblock, chief strategist for equities at RBC Capital Markets.
"We'll hopefully dig our way out of it in the second half of the year and, like I say, in relative terms that could be a little more harmful or a little bit more of a counterweight on the TSX."
Reporting by Julie Gordon; editing by Rob Wilson