CANADA STOCKS-Fed hopes propel TSX to best week in 7 months

Fri Jul 12, 2013 4:52pm EDT
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* TSX falls 31.08 points, or 0.25 percent, at 12,462.18
    * Five of 10 main index sectors decline
    * Index jumps 2.7 percent this week
    * Gold-mining shares drop 2.5 percent on weaker bullion

    By John Tilak
    TORONTO, July 12 (Reuters) - Canada's main stock index fell
on Friday due to a drop in shares of gold and energy producers,
but the U.S. Federal Reserve's support for monetary stimulus
helped the index posted its biggest weekly gain in more than
seven months.
    The Toronto market eased after recording gains in the
previous four sessions and hitting a one-month high earlier in
the day. It still ended the week up 2.7 percent.
     Investors also processed mixed U.S. earnings reports, as
well as data showing U.S. consumer sentiment took a hit in early
July and wholesale prices rose. 
    Federal Reserve Chairman Ben Bernanke said on Wednesday that
the U.S. central bank must keep a stimulative monetary policy in
place due to weak to inflation levels and a high unemployment
    That sparked a rally in global equity markets and caused a
1.5 percent jump in Toronto stocks on Thursday. 
    "What Bernanke is trying to do this time, by floating trial
balloons and then backpedaling, is making sure this is an
orderly process and not a big market crash," said Colin
Cieszynski, senior market analyst at CMC Markets.
    "He was saying, 'Don't confuse us taking the foot off the
gas pedal with putting the foot on the brake'," he added.
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 31.08 points, or 0.25 percent, at
    The global economic recovery needs to gain momentum before
sentiment for Canadian equities returns, Cieszynski said. "You
would think at some point the Canadian indices would have room
to recover, but it may take a little longer before we go
    Five of the 10 main sectors on the index were in the red on
    Energy shares lost 0.5 percent, failing to benefit from a
jump in the price of oil. 
    The materials group, which includes mining stocks, was the
worst performer among the major sectors and gave back 1 percent.
A lower bullion price took gold producers down 2.5 percent.
    Barrick Gold Corp fell 2.3 percent to C$15.49, and
Goldcorp was down 1.8 percent at C$26.72. 
    "People are worried any further declines in commodity prices
could have an effect on those companies and industries," said
Michael Sprung, president of Sprung Investment Management.
    The valuations of material stocks are becoming more
appealing, he added. Investors need to "find the ones that have
the financial wherewithal to survive a prolonged period of low
    Financials, the index's most heavily weighted sector, were a
little changed. 
    Royal Bank of Canada, the country's biggest lender,
added 0.3 percent to C$61.80. 
    In company news, Bank of Nova Scotia withdrew its
application to acquire a nearly 20 percent stake in Bank of
Guangzhou after Chinese authorities decided against proceeding
with the C$719 million ($691.28 million) deal. Shares of
Scotiabank gained 0.2 percent to C$57.05.