CANADA STOCKS-TSX down after gloomy global data, miners drop

Thu Sep 20, 2012 4:50pm EDT
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* TSX drops 26.91 points, or 0.22 percent, at 12,409.25
    * Mining and industrial stocks weigh
    * Gloomy China, European data highlight global headwinds
    * Energy stocks rise after recent slide as crude rallies

    By Alastair Sharp
    TORONTO, Sept 20 (Reuters) - Canada's main stock index
slipped on Thursday, pulled down by miners and the country's two
big railways, as investors turned cautious after dismal economic
data showed that global recovery is far from assured despite
central bank monetary policy easing.
    The data signaled that China remains on track for a seventh
straight quarter of slowing annualized growth, while U.S.
manufacturing suffered its weakest quarter in three years, and
conditions at European businesses worsened. 
    "What's really moving some of the economically sensitive
sectors today is the weak manufacturing report out of China
overnight," said Youssef Zohny, portfolio manager at Stenner
Investment Partners, part of Richardson GMP in Vancouver. 
    "They continue to be in a contractionary stage on the
manufacturing side, that's put a little bit of caution in the
market," he said.
    The Toronto Stock Exchange's S&P/TSX composite index
 followed stock markets around the world lower, closing
down 26.91 points, or 0.22 percent, at 12,409.25.    
    The decline was the TSX's fourth straight, but it stayed
above its closing level of last Thursday, when the U.S. Federal
Reserve unveiled an aggressive stimulus package.    
    Major industrial stocks led the session's decline, with
Canadian National Railway Co losing 4.5 percent to
C$87.44, and Canadian Pacific Railway Ltd off 2.6
percent at C$80.75.
    The drops in the shares of the Canadian railways came after 
 the third-largest U.S. railway, Norfolk Southern Corp,
warned on its third-quarter profit after the market close on
    "Norfolk and Southern's warning yesterday was a little
unusual, it has probably cast a pall over some of the
transportation stocks," said Paul Hand, managing director at RBC
Capital Markets.
    Gold miners weighed as bullion prices retreated, while
energy stocks were among the best performers after suffering
sharp losses recently on declining crude oil prices.
    Both Zohny and Hand said they were unfazed by Thursday's
pullback given the broader trajectory of the index, which has
risen 5.5 percent in the last three months. 
    "We've had a fairly strong liquidity-driven rally in the
first two weeks of September, so it's not too surprising to see
some investors take some profits," Zohny said.
    "Moods swinging back and forth...we've had pullbacks all the
way along, intra-day or even for a week or two, but the market
has continued to grind higher since June," RBC's Hand added.
    In China, manufacturing contracted in September, according
to a private sector survey of factory managers. In the euro
zone, a downturn in activity in the service sector steepened
this month at the fastest pace since July 2009. 
    And in the United States, the number of people filing new
claims for jobless benefits fell last week, but the drop was
from an upwardly revised number the previous weak, and the
underlying tone of the report pointed to some weakening in the
labor market. 
    Shares in Centerra Gold Inc rose 4.9 percent to
C$11.36 after the miner said it had restarted the mill at its
Kumtor mine in Kyrgyzstan, ending a seven-week shutdown after
the company ran out of stockpiled ore for processing.