TSX dips on central bank moves; awaits U.S. jobs data

Thu Jul 5, 2012 5:14pm EDT
 
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* TSX ends down 96.96 pts, or 0.8 pct, at 11,816.91
    * Energy shares lead losses; SXC falls 6 pct
    * ECB, China, BoE moves fail to lift market
    * Traders look to Friday's U.S. jobs report

    By Jon Cook
    TORONTO, July 5 (Reuters) - Canadian stocks ended their
longest rally in a year on Thursday, led lower by energy shares,
as markets interpreted easing measures by central banks in
Europe, China and England as a sign the global economy is
weakening.
    Equity markets slumped along with the euro after the
European Central Bank cut its main interest rate to a record low
and reduced its deposit rate to zero to help tackle the euro
zone debt crisis. 
    The slide in the euro against the U.S. dollar made it more
expensive for investors to buy commodities priced in dollars.
U.S. oil futures, gold and base metals all retreated, hurting
Canada's resource-heavy index.   
    Stimulus moves by central banks usually boost commodities,
said Craig Fehr, Canadian market strategist at Edward Jones in
St. Louis, Missouri. That was not the case on Thursday.
    "The other read through from the action we got from central
banks today is that the global economy is slowing down to some
degree and that's conversely weighing on commodity prices," said
Craig Fehr, Canadian market strategist at Edward Jones in St.
Louis, Missouri.
    Negative sentiment was compounded by comments from ECB
President Mario Draghi, who said at a press conference after the
rate announcement that the ECB sees a weakening of growth in the
whole of the euro zone area and that downside risks to growth
are materializing. 
    European equities and commodities initially gained after the
Bank of England expanded its quantitative easing program and
China dropped rates for a second time in two months.
  
    All of Canada's 10 main sectors were in the red, led by the
oil and gas group, which fell 1.7 percent. Materials, which
includes miners, slipped 0.8 percent.
    The most influential decliners included Suncor Energy
, down 2.3 percent at C$30.40, Canadian Natural Resources
, which dropped 2.8 percent to C$27.54, Goldcorp Inc
, off 2.6 percent at C$39.30, and Yamana Gold,
which sank 3.4 percent to C$16.22.
    Barrick Gold, the world's largest gold miner, edged
down 0.7 percent to C$38.58 after Argentina's Supreme Court
ruled earlier this week that key articles of a glacier
protection law should apply in a northern province where the
gold producer is building a huge mine high in the Andes.
 
    The Toronto Stock Exchange's S&P/TSX composite index
 finished down 96.96 points, or 0.8 percent, at
11,816.91. The loss ended a streak of six straight increases,
matching a similar run from June 27 to July 5, 2011.
    
    CANADA, U.S. PAYROLLS EYED
    Markets had rallied to start the month after European
leaders agreed last week on measures to cut soaring borrowing
costs in Italy and Spain and recapitalize banks. But Spanish and
Italian bond yields spiked on Thursday after Draghi's remarks.
    "Today they may be having a little more sober reflection,"
said Robert McWhirter, president and portfolio manager at
Selective Asset Management Inc.
    Canadian financial stocks also edged down 0.4 percent.
Losses were led by top insurer Manulife Financial Corp,
which fell 1.8 percent to C$11.24, Brookfield Office Properties
Inc, down 1.5 percent to C$18.05, and Royal Bank of
Canada, which dipped 0.3 percent to C$53.53.
    Another factor weighing on the downside was SXC Healthcare
Solutions, whose shares plunged nearly 6 percent to
C$99.50. The slide came after a big jump in the stock the
previous session following a shift in the weighting of the TSX
announced after market close on Tuesday.
    Mixed U.S. data also kept investors guessing on the state of
the world's top economy. Data on Thursday showed U.S. private
employers added 176,000 jobs in June and weekly jobless claims
fell by the most in two months. However, June retail sales
disappointed, casting a further shadow on the strength of the
U.S recovery.   
    Economists do not expect Friday's Canadian and U.S. payrolls
reports for June to dispel concerns that the North American
recovery is losing steam. 
    "The market's probably in a bit of suspension today waiting
on the headline number tomorrow, which is the U.S. employment
report," said Fehr. "If we get a better-than-expected number
there it would certainly lift spirits in the market."