CANADA STOCKS-TSX ends at 5-week low as U.S. earnings weigh

Wed Oct 10, 2012 4:53pm EDT
 
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* TSX ends down 61.15 points, or 0.5 percent, at 12,212.42
    * Energy and financials drag; golds rise
    * Weakest close for index since Sept. 6

    By Claire Sibonney
    TORONTO, Oct 10 (Reuters) - Canada's main stock index hit
its lowest closing level in nearly five weeks on Wednesday,
driven downward by falling financial and energy shares after the
start of the U.S. earnings season flashed mixed signals for the
global economy.
    U.S. earnings season kicked off with aluminum company Alcoa
 posting a quarterly net loss and a weaker consumption
outlook for China, while Chevron's profit warning
dragged on the energy sector. Those negative headlines were only
partially offset by Yum Brands Inc, the parent company
of KFC, which raised its full-year outlook after sales in China
held up despite that nation's cooling economy. 
    "I think we came in to start off earnings season with fairly
low expectations and it seems some investors were disappointed,"
said Youssef Zohny, portfolio manager at Stenner Investment
Partners, part of Richardson GMP, in Vancouver.
    "We saw earnings from a major industrial company as well as
a major consumer company both doing business in China and we saw
an interesting dynamic there where an industrial company was
disappointing and a consumer company was better than expected." 
    Among the heaviest laggards on the TSX were the
growth-sensitive cyclical sectors such as energy, down 1
percent, and financials, off 0.6 percent.
    Suncor Energy lost 1.2 percent to C$32.29, Canadian
Natural Resources dropped 1.8 percent to C$29.80, and
Bank of Nova Scotia fell 0.8 percent to C$53.37.
    Gold miners were among the top gainers after a heavy
sell-off in the previous session. 
    Aurico Gold was the most influential name on the
upside, surging nearly 21 percent to C$7.60 after announcing it
will sell the Ocampo mine in Mexico, as well as adjacent
exploration projects and a 50 percent stake in the Orion
project, to tycoon Carlos Slim's Minera Frisco for $750 million.
 
    Goldcorp Inc rose 0.5 percent to C$43.61, and Yamana
Gold climbed 1.9 percent to C$18.40.
    The Toronto Stock Exchange's S&P/TSX composite index
 ended down 61.15 points, or 0.5 percent, at 12,212.42,
its weakest close since Sept. 6.
    Analysts are forecasting the third-quarter earnings of Wall
Street's S&P 500 companies will fall 2.3 percent from the
year-earlier quarter, according to Thomson Reuters data, which
would be the first drop in U.S. quarterly earnings in three
years.
    Continued uncertainty over whether, and when, Spain will
apply for a bailout helped darken the market mood. A Spanish
bailout is seen by some as the necessary next step to
alleviating the euro zone's debt crisis.
    In its semi-annual check on the world's financial health
earlier this week, the International Monetary Fund said the euro
zone crisis was an increasing threat to global financial
stability and that confidence was "very fragile".
 
    In Canadian company news, pharmacy chain Jean Coutu Group
Inc rose 0.3 percent to C$14.57 after reported a rise
in adjusted quarterly earnings on Wednesday as its generic drug
manufacturing subsidiary, Pro Doc, posted a double-digit gain in
sales and operating income. 
    Earnings from U.S. warehouse chain Costco Wholesale Corp
 were also a bright spot. The company reported a 27
percent jump in fourth quarter profit on higher sales and
membership fees.
    "I thought the earnings that came out from Yum Brands ...
Costco this morning and Jean Coutu were pretty meaningful. The
companies continue to report good earnings and modest economic
growth continues," said Barry Schwartz, vice president and
portfolio manager at Baskin Financial Services.