CANADA STOCKS-TSX drops as commodities hit by growth worries

Thu Jun 21, 2012 3:40pm EDT
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* TSX down 289.55 points, or 2.5 percent, at 11,469.79
    * Global growth fears hit commodity price
    * All major sectors decline

    By Allison Martell
    TORONTO, June 21 (Reuters) - Canada's main stock index
d ropped more than 2 percent o n Thursday i n a broad-based
decline, as weak economic data from the United States, China and
Europe fanned global growth fears and drove down commodity
    Oil, gold and copper prices all fell after a raft of
disappointing data, including news that U.S manufacturing grew
at its slowest pace in 11 months in June and hiring slowed as
export demand waned. Chinese and European factory activity also
    "Global data has been very weak, and markets have been
unable to sustain the recent rally," said Fergal Smith, managing
market strategist at Action Economics in Toronto. The TSX
rallied to a five-week high on Tuesday, but has since lost
    At about 2:30 p.m. (1830 GMT) the Toronto Stock Exchange's
S&P/TSX composite index was down 2 89.55 points, or 2.5
percent, at 11,469.79.
    Every major sector in the TSX was lower. The heavyweight
e nergy group, down 4 .7 p ercent, and materials, down 3 .7 p ercent,
had the biggest impact. The materials sector includes
heavyweight gold and base metal miners. 
    "We're seeing a bit more evidence that the global economy,
while it's still going to continue to grow, will probably do so
in a much slower fashion," said Craig Fehr, Canadian market
strategist at Edward Jones in St. Louis, Missouri. 
    "That has investors concerned. That's putting pressure on
energy and commodity prices and thus weighing on the TSX."
    Suncor Energy fell 5.8 percent to C$27.93 and
Canadian Natural Resources fell 4 .7 p ercent to C $26.98.
    Financial issues fell 1.8 percent, led by Royal Bank of
Canada, which dropped 2.5 percent to C$51.73.
    Banking industry sources said ratings agency Moody's was set
to announce downgrades of many of the world's biggest banks on
Thursday. The agency said in February that RBC could be cut by
two notches. 
    The three companies played the biggest role of any stocks in
pushing the Toronto market lower.
    Commodity prices were broadly lower, with the Thomson
Reuters-Jefferies CRB Index down 2 .1 p ercent on signs of
a slowdown in global growth. U. S. crude futures slipped
below $80 a barrel for the first time since October, and copper
 fell nearly 3 percent.  
    Business surveys showed the downturn in the euro zone's
private sector becoming entrenched, as falling new orders and
employment levels dented business confidence. 
    A similar survey of private sector activity in China
compiled by HSBC found its factory sector had shrunk for an
eighth straight month in June on weaker demand for exports.
    In Canada, retail sales dropped 0.5 percent in April from
the previous month, defying expectations of an increase, in
another sign that second quarter growth was disappointing.
    Other major decliners included Encana Corp shares,
which dropped 7 .2 p ercent to C $20.54. Encana was also affected
by news its capital spending would likely exceed its cash flow
for at least the next 18 months as it accelerates its transition
to more oil and liquids-rich natural gas production.
    Valeant Pharmaceuticals International Inc said it
expected second-quarter results to be weaker than its first
quarter. Its shares dropped more than 5 percent.