CANADA STOCKS-TSX rally fizzles as Greek fears mount

Wed May 16, 2012 4:46pm EDT
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* TSX down 16.97 points, or 0.15 percent, at 11,326.08
    * Touches 2012 low at 11,298.46
    * Energy, financials weigh
    * ECB says it will stop funding some Greek banks
    * U.S. data pares some losses

    By Jon Cook	
    TORONTO, May 16 (Reuters) - Canada's main stock index fell
to a seven-month low on Wednesday after news that the European
Central Bank had stopped funding operations for some Greek banks
rattled financial markets, erasing resource gains on the back of
strong U.S. economic data.	
    Markets retreated after the ECB confirmed a Reuters report
that it had ceased providing liquidity to some of Greece's most
undercapitalized banks, adding to concerns the debt-ravaged
country may soon leave the euro zone. 	
    After the news hit, Canadian Finance Minister Jim Flaherty
told the Senate's banking committee: "These are not good
developments, this can create a shock that will affect Canada."
    Canadian stocks erased gains and traded weaker after the
latest news from Europe, led by the heavyweight energy sector,
which sank 0.7 percent.	
    "There's a fatigue over the price declines we've had in the
materials/resource sectors which has been pretty dramatic," said
Paul Hand, managing director at RBC Capital Markets.	
    Prominent decliners included Suncor Energy, down 1
percent to C$27.39, Cameco Corp, which fell 2.1 percent
to C$19.61, and Crescent Point Energy Corp, sliding 2.9
percent to C$38.88.	
    Financial stocks edged down 0.4 percent, shrugging off
efforts on Tuesday by German Chancellor Angela Merkel and new
French President Francois Hollande to quell talk of a possible
Greek exit from the euro zone.	
    Top insurer Manulife Financial was the biggest
laggard, falling 3.3 percent to C$11.25. Major lenders
Toronto-Dominion Bank and Bank of Nova Scotia 
each slipped 0.3 percent to C$78.93 and C$52.36 respectively.	
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 16.97 points, or 0.15 percent, at
11,326.08. Earlier, it fell as low as 11,298.46, its lowest
level since Oct. 5.	
    The index continued its May swoon, sliding for the tenth
time in 11 sessions. It has shed more than 8 percent so far this
    Hand, however, said that makes the TSX overdue for a bounce.	
    "On a short-term basis we're getting quite oversold so a
rally of some significance is probably pending," he added.	
    Early on Wednesday, the TSX rose as high as 11,474.05,
spurred by data showing U.S. industrial production posted its
fastest growth in over a year in April and a surge in
groundbreaking for new homes that suggested a rebound in U.S.
housing was gaining some traction. 	
    Gains were led by the embattled mining sector, which rose
1.4 percent.	
    "The price of gold stocks relative to gold and metals is
attractive," said Robert McWhirter, president and portfolio
manager at Selective Asset Management Inc.	
    Barrick Gold climbed 1.4 percent to C$35.71 and
Yamana Gold rose 2.7 percent to C$13.19. Other miners
on the upside included First Quantum Minerals, which
spiked 5.3 percent to C$17.74, Inmet Mining, jumped 1.5
percent to C$46.22, and Osisko Mining Corp rose more
than 4 percent to C$6.67.	
    Losing ground was Alacer Gold Corp, whose shares
plummeted more than 13 percent to C$4.96 on Wednesday after it
raised its cash cost outlook for 2012 and two brokerages cut
their price target on the stock. 	
    Also boosting sentiment was Canadian data that showed
factory sales blew past expectations in March with the biggest
gain in six months due to vigor in the oil industry, putting the
economy back on a growth track after a surprise contraction in
    In other company news, shares of West Fraser Timber Co Ltd
 climbed 4.8 percent to C$44.70 after investment firm
Raymond James raised the Canadian lumber company's stock to