TSX tumbles as materials falter on weak gold

Wed Feb 29, 2012 4:37pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Jennifer Kwan

TORONTO (Reuters) - Toronto's main stock index ended lower on Wednesday with materials shares hit as gold prices weakened after U.S. Federal Reserve Chairman Ben Bernanke failed to provide hints of further monetary stimulus, which sent the U.S. dollar sharply higher.

The key materials sector, which accounts for some 20 percent of the broader Toronto index, was down 2.8 percent to lead the market lower. Barrick Gold (ABX.TO: Quote) fell 3.9 percent to C$47.34 and Goldcorp (G.TO: Quote) sank 3.6 percent to C$47.97 on weaker gold prices.

Bullion skidded 3 percent on Wednesday for its biggest one day drop in just over two months, pressured by a rally in the greenback after diminished expectations of another Fed asset-buying move raised the currency's appeal.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended the day down 96.46 points, or 0.76 percent, at 12,644.01, with five of its 10 main sectors lower.

The index gained 1.5 percent on the month.

Bernanke offered a tempered view of the U.S. economy and stopped short of signaling further Fed bond purchases, dashing the hopes of some traders in financial markets who were betting on more monetary stimulus.

The Fed's two asset-purchase programs, called quantitative easing, helped stimulate the economy. However, the moves hurt the U.S. dollar's value as the central bank was effectively printing money.

"There'd been a certain amount of buoyancy in the markets on the basis that the Fed would have to continue quantitative easing and perhaps launch further stimulus," said Rick Meslin, head of Canadian equities at UBS.   Continued...

A general view of the TSX (Toronto Stock Exchange) Broadcast Centre in Toronto June 20, 2008.     REUTERS/Mark Blinch