CANADA STOCKS-TSX falls after Bernanke cools stimulus hope

Tue Jul 17, 2012 11:52am EDT
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* TSX down 28.64 points, or 0.2 pct, at 11,492.54
    * Materials lead losses on lower gold, copper prices
    * BoC holds interest rates, maintains hawkish tone

    By Jon Cook
    TORONTO, July 17 (Reuters) - Canada's main stock index slid
in volatile trade on Tuesday, led lower by mining shares, after
Federal Reserve Chairman Ben Bernanke dampened expectations of
further stimulus measures and the Bank of Canada left interest
rates unchanged.
    Bernanke said the Fed stands ready to offer additional
monetary support to the U.S. economy if needed, but gave no
signs that the central bank was moving closer to a third round
of bond purchases. 
    Markets had hoped that Bernanke would signal that a third
round of quantitative easing was imminent, following recent weak
U.S. data on retail sales, manufacturing and employment.
    "The news tends to have a half-life of about an hour, and
then we'll move on to the next worry or relief," said Paul Hand,
managing director at RBC Capital Markets.
    Canada's resource-heavy index initially rose, along with
commodity prices, but erased gains after Bernanke's comments in
his semiannual testimony to Congress.
    The powerhouse materials sector, which includes miners, led
the declines, tumbling 1.4 percent as gold and copper prices
    Losses were led by gold miners Barrick Gold, down
1.9 percent to C$34.71; Goldcorp, down 1.6 percent to
C$33.72; Yamana Gold, down 3.1 percent to C$14.79; and
Kinross Gold, off 4.5 percent at C$8.07.
    AuRico Gold plunged nearly 16 percent to C$6.46
after the company announced on Tuesday its chief executive, René
Marion, resigned for health reasons and was replaced by Scott
Perry. The news came a day after the small gold miner cut its
2012 production forecast.  
    Shares of First Quantum Minerals Ltd fell 2.2
percent to C$16.60 on Tuesday after it said it has suspended
operations at its Guelb Moghrein copper mine in the North
African country of Mauritania due to a strike by some of its
unionized workers. 
    The oil and gas subindex was flat after initially rising 1
percent. Cenovus Energy was down 1 percent at C$33.17
and Baytex Energy tumbled 3 percent to C$40.90 after a
price downgrade by the Canadian Imperial Bank of Commerce.
    "It looks like the oils and materials stocks are bottoming,"
said Hand.
    Around 11:30 a.m. EDT (1630 GMT), the Toronto Stock
Exchange's S&P/TSX composite index was down 28.64
points, or 0.2 percent, at 11,492.54. It touched a session high
at 11,571.31 shortly after the open.
   While Bernanke left the door open to further stimulus
measures, the Bank of Canada left interest rates unchanged on
    Using mildly hawkish language that was unchanged from that
used in June, the Canadian central bank hinted at higher
interest rates, though it lowered economic growth forecasts and
said the economy would take longer than it had previously
expected to reach full capacity.
    "It is a bit of a surprise that the bank continues to
doggedly stick to its tightening bias," said Douglas Porter,
deputy chief economist at BMO Capital Markets. "Given all the
global risks out there, I have a hard time believing the bank is
going to be raising interest rates before the middle part of
next year."
    In other company news, Héroux-Devtek Inc shares
surged more than 40 percent to hit a life-high of C$11.75 after
U.S. rival Precision Castparts Corp said it would buy
Héroux-Devtek's aircraft parts business for about $295 million.