CANADA STOCKS-TSX suffers biggest drop of 2012 on growth fears

Thu Jun 21, 2012 5:06pm EDT
 
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* TSX down 351.02 points, or 2.99 percent, at 11,408.32
    * Biggest one-day drop since Oct. 3
    * Global growth fears hit commodity price
    * All major sectors decline

    By Allison Martell
    TORONTO, June 21 (Reuters) - Canada's main stock index fell
nearly 3 percent on Thursday, i ts largest one-day drop this
year, as weak economic data from the United States, China and
Europe fanned global growth fears and drove down commodity
prices.
    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
slowed.  
    "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
ground.
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 3 51.02 p oints, or 2 .99 p ercent, at
11 ,408.32. It was the biggest one-day percentage drop since Oct.
3.
    Every major sector in the TSX was lower. The heavyweight
energy group, down 5 .4 p ercent, and materials, down 4 .2 p ercent,
had the biggest impact. The materials sector includes 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, ROYAL BANK STRUGGLE
    Suncor Energy had the biggest impact, falling 6.6
p ercent to C $27.70. 
    Financial issues fell 2.3 percent, led by Royal Bank of
Canada, which dropped 3 .2 p ercent to C $51.33, and
Toronto-Dominion Bank, which was 2.8 percent lower at C$78.36.
    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, gold posted its biggest one-day drop
since Feb. 29 an d co pper retreated to two-week lows. [ O/R]
  
    "We're going to continue to see a high degree of volatility
until a more normalized economic environment exists," said Bill
Horton, chief investment officer at MD Physician Services. "That
could be months, and it could be more than months."
    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 .9 p ercent to C $20.39. 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 mo re than 5 percent.