CANADA STOCKS-TSX flat as Europe doubts linger

Mon Jun 11, 2012 11:12am EDT
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* TSX down 12.51 pts, or 0.1 pct, at 11,488.12
    * Mining and energy shares lead losses
    * Doubts linger after Spanish bank bailout

    By Jon Cook	
    TORONTO, June 11 (Reuters) - Canadian stocks were little
changed on Monday after energy and mining shares reversed early
gains on doubts Spain's bank bailout could solve the country's
debt problems and concerns Greece could exit the euro after
upcoming elections.	
    Markets initially rose after euro zone policymakers agreed
to lend Spain, the region's fourth-largest economy, up to 100
billion euros ($124.67 billion) to help prevent a run on banks.
The relief rally was short-lived as equity markets retreated and
Spanish and Italian bond yields rose, on worries the action on
Spain was a temporary solution. 	
    "The Europeans themselves are going to proceed with an audit
to the banking system and so this bailout can still change along
the way," said Carlos Leitao, chief economist at Laurentian Bank
Securities. "Markets are kind of pulling back from the initial
    Half of Canada's 10 main sectors were in the red. Losses
were led by the heavyweight materials group, which fell 0.5
percent. Oil and gas shares were also down 0.4 percent, having
risen more than 1 percent after the opening bell.	
    The most influential decliners included Barrick Gold
, which dropped 0.6 percent to C$39.88, Goldcorp Inc
, off 0.9 percent at C$39.90, and Suncor Energy,
down 0.8 percent to C$28.79.	
    At 10:48 a.m. (1448 GMT), the Toronto Stock Exchange's
S&P/TSX composite index was down 12.51 points, or 0.1
percent, at 11,488.12. It had retreated more than 100 points
after touching a session high at 11,593.66.	
    Losses were stemmed by the financial sector, which was still
up 0.2 percent as Canadian banks cheered news of a bailout to
Spain's wobbly banking system.	
    Shares of Royal Bank of Canada, the country's
largest lender, rose 0.3 percent to C$50.46. Toronto-Dominion
Bank edged up 0.1 percent at C$78.01 and Bank of Nova
Scotia also gained 0.2 percent to C$51.95.	
    With other sectors erasing gains, Leitao was surprised
Canada's top banks were able to stay in positive territory.	
    "We were in the midst of a severe risk off cycle that was
kind of interrupted a little bit by the news over the weekend,
but I think now we're reverting to the risk off scenario."	
    Traders said any bounce should give way to profit taking
before the June 17 Greek elections. A win for parties opposing
the austerity terms of the country's international bailout could
lead to Greece leaving the euro.