CANADA STOCKS-TSX flat as Fed comments offset China rate cut

Thu Jun 7, 2012 1:40pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* TSX down 10.81 points at 11,622.59
    * Earlier hit highest level in nearly 4 weeks
    * Global stocks rally on surprise China rate cut
    * Sliding gold stocks keep TSX under pressure
    * Barrick Gold key drag on index

    By Jennifer Kwan	
    TORONTO, June 7 (Reuters) - Toronto's main stock was little
changed on Thursday as gold stocks skidded after U.S. Federal
Reserve Chairman Ben Bernanke offered no hints that further
stimulus was imminent, halting a market rally fueled by a
surprise interest rate cut in China.	
    Gold tumbled 2 percent as the comments by Bernanke prompted
investors to unwind bullish bets on expected easing after last
week's dismal U.S. jobs report. 	
    "Bernanke didn't give the green light towards quantitative
easing, a factor that would've supported gold," said Fergal
Smith, managing market strategist at Action Economics.   
"That's been a disappointment for folks who are long gold."	
    Bullion was hit especially hard as it has been heavily used
by institutional investors to hedge against the economic
uncertainties brought by monetary easing.	
    At around 1:20 p.m. (1720 GMT), the Toronto Stock Exchange's
S&P/TSX composite index was down 10.81 points, or 0.09
percent, at 11,622.59. 	
    Gold stocks kept the broader index from joining a global
stocks rally. 	
    Barrick's was down nearly 5 percent at C$39.50
after the surprising ouster of Chief Executive Aaron Regent on
Wednesday raised more questions than it answered for anxious
investors. 	
    Goldcorp sank 3.8 percent to C$39.72, and Yamana Gold
 was down 3 percent at C$16.05.	
    Earlier, the main stock index had risen as high as
11,727.58, its strongest level since May 11, as China delivered
twin surprises on interest rates, cutting borrowing costs to
combat faltering growth while giving banks additional
flexibility to set competitive lending and deposit rates.
 	
    Given weak U.S. data and troubles in Europe, there has been
rising speculation of more stimulus measures from global central
banks.	
    "It shows the Chinese authorities recognize that the
slowdown in China has gone far enough," said Gavin Graham,
president at Graham Investment Strategy. "That means there's
likely to be an increase in demand for commodities and an
increase in demand for the Chinese domestic economy, which will
help world trade and therefore commodity-based, resource-based
markets like Canada." 	
    Diversified miner Teck Resources was up 2.8
percent at C$33.20 and Cenovus climbed 3 percent to
C$33.42. Suncor Energy rose 1.6 percent to C$29.72 and
First Quantum was higher by 2.3 percent at C$18.55.	
    Yogawear retailer Lululemon Athletica Inc was down
8 percent at C$66.20 after its said that inventories rose and
sales growth in established stores would slow.