CANADA STOCKS-TSX slips as M&A deals worry investors

Mon Dec 17, 2012 4:59pm EST
 
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* TSX ends down 15.37 points, or 0.12 percent, at 12,281.35
    * 3 biggest weights are companies buying or selling assets
    * Index's fall bucks rising U.S. optimism

    By Alastair Sharp
    TORONTO, Dec 17 (Reuters) - Canada's main stock index
slipped on Monday as investors backed away from several
companies involved in major transactions and failed to catch the
"fiscal cliff" optimism that cheered U.S. stock markets.
    Sun Life Financial Inc fell 3.9 percent to C$26.74
after saying it will sell its U.S. annuity business for $1.35
billion as the financial terms of deal fell
short of market expectations.
    Shares in First Quantum Minerals Ltd shed 4 percent
to C$20.11 after the company turned hostile with a sweetened
takeover bid for rival Inmet Mining. Inmet shares
jumped 4.32 percent. 
    Shares of First Majestic Silver Corp fell 9.7
percent to C$20.45 after it announced the acquisition of Orko
Silver Corp, a smaller rival. 
    The Toronto Stock Exchange's S&P/TSX composite index
 at one point hit a one-week low, but pared some of
those losses to end down 15.37 points, or 0.12 percent, at
12,281.35.
    That was in stark contrast with the sharp gains seen in the
United States, where the S&P 500 notched its strongest day in
almost a month on hopes that a political deal to avoid the
"fiscal cliff" of automatic tax hikes and spending cuts could be
agreed on soon. 
    "There's more confidence today in the U.S. market than there
has been for some time and certainly we don't have anything here
that is really striking on the positive side," said Fred
Ketchen, director of equity trading at ScotiaMcLeod. 
    President Barack Obama and top Republican John Boehner met
at the White House as aides for both major parties said they
were optimistic that a fiscal deal could be reached in coming
days. 
    Canada's energy sector notched gains, with Cenovus Energy
 up 0.9 percent at C$32.55 and Cameco Corp 
adding 2.9 percent to C$19.84. The discount of U.S. crude to the
Brent benchmark narrowed following news that a key pipeline
expansion will be completed next month. 
    Only four of the index's 10 main sectors ended in the red,
though that included the heavyweight materials and financial
groups.
    Materials, which includes mining stocks, shed 0.7 percent,
with Yamana Gold Inc down 1.9 percent at C$16.90.
    "Investors may be hedging their bets. If nothing happens (to
avoid the fiscal cliff), they want to see what effect that's
going to have on the marketplace, whether it's already priced
in," said Irwin Michael, portfolio manager at ABC Funds.
    "The sentiment is people would like to be bullish, but they
are waiting for that catalyst, the fiscal cliff or maybe more
indication that the economy is turning around. Once that
happens, we suspect it could feed upon itself and the market
could go significantly higher in 2013," Michael said.