CANADA STOCKS-TSX tumbles on global growth fears

Fri Jul 6, 2012 5:13pm EDT
 
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* TSX ends down 157.38 pts, or 1.3 pct, at 11,659.65
    * Resource, financial shares lead losses
    * Soft U.S., Canada jobs data hurts risk sentiment
    * Global growth fears spook investors

    By Jon Cook
    TORONTO, July 6 (Reuters) - Toronto's main stock index dove
on Friday and financial shares wilted, unable to find sustenance
from lackluster jobs data in Canada and the United States that
underscored concern the global economy was slowing further.
    As a heat wave gripped Canada's most populous city, risk
sentiment was chilled by weak North American employment numbers.
    U.S. nonfarm payrolls added just 80,000 jobs in June - far
fewer than needed to bring down the 8.2 percent unemployment
rate - fueling concerns that Europe's debt crisis is deepening a
slowdown in the U.S. economy. 
    "The market is hoping for good news for a change, but this
hasn't happened for the last three months," said Elvis Picardo,
strategist and vice president of research at Global Securities
in Vancouver.
    "It obviously had a pretty big impact on market sentiment on
the day."  
    In Canada, job growth slowed in June for a second straight
month in a reality check after outsized employment gains earlier
this year, firming the market's view that the Bank of Canada
won't act soon on recent hints of a rate hike. 
    Nearly all of Canada's 10 main sectors were in the red. The
Canadian oil and gas and materials sub-indexes both fell 2.2
percent as U.S. crude futures tumbled more than 3 percent and
copper and gold prices slumped.   
    The most influential decliners included Suncor Energy
, which slipped 3.4 percent to C$29.36, Canadian Natural
Resources, down 3.5 percent to C$26.58, Barrick Gold
, which shed 2.7 percent to C$37.55, and Teck Resources
, off 3.2 percent at C$31.92.
    The disappointing U.S. results raised expectations the
Federal Reserve would launch a new round of monetary stimulus, 
a Reuters poll of Wall Street economists showed on Friday.
 
    The Toronto Stock Exchange's S&P/TSX composite index
 finished down 157.38 points, or 1.3 percent, at
11,659.65. Despite the loss, the index ended the
holiday-shortened week up 0.5 percent.
    Adding to the gloomy sentiment, an index of purchasing
activity in the Canadian economy hit its lowest level in almost
a year. The Ivey Purchasing Managers Index fell to 49.0 in June
from 60.5 in May, its lowest since July, 2011. A reading below
50 indicates contraction. 
    The weak jobs data came a day after China, the euro zone and
Britain all loosened monetary policy, signaling growing alarm
about the world economy. 
    The central bank action failed to impress investors on
Friday, pushing Spanish borrowing costs back up to unsustainable
levels reached before last week's European Union summit took
measures designed to ease the pressure.
    Canadian financial shares slid 1.2 percent, led by the
country's biggest lenders. Royal Bank of Canada dipped
1.4 percent to C$52.78, Bank of Nova Scotia dropped 1.9
percent to C$52.85, and Toronto-Dominion Bank edged down
0.5 percent at C$79.50.
    Top insurer Manulife Financial Corp fell 3 percent
to C$10.90.    
    Investors were also spooked after IMF chief Christine
Lagarde said the world economic outlook had deteriorated as both
developed and big emerging nations show signs of slowing down.
 
    "We've got growth worries," said Fred Ketchen, director of
equity trading at ScotiaMcLeod. "Given the fact that there's a
whole lot of places that have instituted some kind of stimulus
measures, so far it hasn't produced positive results."
    Friday's market swoon had traders looking ahead to the start
of second-quarter earnings season next week.
    "If earnings come in pretty much as expected the market
would be poised to rally in that case," said Picardo.