CANADA STOCKS-TSX ends up, but pares gains on Spain

Tue May 29, 2012 4:59pm EDT
 
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* TSX ends up 43.15 pts, or 0.4 pct, at 11,609.30
    * Energy, financial issues lead gains
    * Gold miners pare gains on Spanish bank worries
    * China stimulus hopes boost commodities


    By Jon Cook	
    TORONTO, May 29 (Reuters) - Canadian stocks finished
slightly higher on Tuesday, erasing most earlier gains as gold
mining firms slid with bullion prices after a downgrade to
Spain's sovereign credit rating rekindled fears about Europe's
deepening debt crisis.	
    Bullion rose in early trade and then fell as the euro
tumbled to its lowest level in nearly two years after credit
agency Egan-Jones downgraded Spain's rating. U.S. equities
temporarily trimmed gains and other commodities dropped. 
  	
    The heavyweight materials sector, which includes gold
miners, sank 1.2 percent. Losses were led by top gold producers
Barrick Gold, down 3.2 percent to C$39.74, Goldcorp Inc
, off 3.1 percent at C$37.15, and Yamana Gold,
which dropped 2.5 percent to C$14.96.	
    "The market is trying to climb a wall of worry," said Irwin
Michael, portfolio manager at ABC Funds, which has $1 billion in
assets under management. "People are concerned with the Greek
situation spreading and it looks like it might have spread to
Spain."	
    Euro zone debt crisis fears increased after Spanish 10-year
borrowing costs neared the 7 percent danger level after the
government, struggling to sort out its finances, proposed
putting sovereign debt into the struggling lender, Bankia.
 	
    Reports that China was planning a new round of stimulus
spending to boost lending and growth cheered stock markets and
briefly boosted oil prices, which later slipped on the Spain
downgrade and Middle East supply worries. 	
    Despite the drag from gold miners, seven of Canada's 10 main
sectors finished higher. Oil and gas firms led the gains, up 0.9
percent.	
    Cenovus Energy climbed 2.2 percent to C$33.11,
Suncor Energy was up 1 percent at C$29.19, and Talisman
Energy jumped 3.2 percent to C$11.09.	
    In related news, Ithaca Energy shares plunged more
than 35 percent to C$1.83 after the oil and gas producer said it
ended talks with all parties related to an acquisition of the
company. 	
    "The Canadian market has been underperforming for a while,
because the commodities sector has been hammered," said Brendan
Caldwell, chief executive of Caldwell Investment Management Ltd.	
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 43.15 points, or 0.4 percent, at 11,609.30,
retreating after hitting a two-week high at 11,687.71.	
    Canadian financial issues, up 0.9 percent, shook off euro
zone debt fears on good second-quarter earnings results from
Bank of Nova Scotia. Scotiabank's shares jumped 2.2
percent to C$51.93 after Canada's No. 3 bank said its
second-quarter operating profit rose 16 percent as international
banking and lending profits grew. 	
    "At some point the world has to move beyond Europe," said
Caldwell. "It's mentally written off Greece. It probably hasn't
written off Spain, Italy and Portugal yet."	
    Canadian railway shares also helped boost gains. Canadian
National Railway was up 2.9 percent to C$84.30 after
the country's largest railway operator said on Monday its 210
train dispatchers had ratified a new collective bargaining
agreement.	
    Canadian Pacific Railway jumped 1.7 percent to
C$76.80 after the Canadian government said it will force CP's
4,800 striking workers back to work with fast-track legislation
aimed at restoring rail service by Thursday. 	
    In other company news, shares of Viterra Inc edged
down 0.2 percent to C$16 after shareholders of Canada's largest
grain handler voted overwhelmingly on Tuesday in favor of a
C$6.l billion ($5.9 billion) friendly takeover bid by Swiss
commodities trader Glencore International Plc.