CANADA STOCKS-TSX hits 10-day low as Europe debt fears rise

Mon Jul 23, 2012 11:14am EDT
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* TSX down 144.03 pts, or 1.2 pct, at 11,478.88
    * Financials, mining shares lead losses
    * Fears about Spain, Greece rattle markets
    * Nexen Inc surges 50 pct after takeover bid

    By Jon Cook
    TORONTO, July 23 (Reuters) - Canada's main stock index fell
sharply on Monday, led by mining and financial shares as
investors fretted about an escalation of Europe's debt crisis
after it appeared Spain may have to seek a full sovereign
bailout and on renewed fears about Greece.
    For the second straight session fears about Spain rattled
equities markets.
    Spanish media reported on Monday that up to six regions may
seek aid from the central government after Valencia asked for
funds on Friday, sending the yield on Spanish 10-year debt to a
euro-era high of over 7.5 percent. 
    "We've got a lot of worries and unease in the markets
today," said Fred Ketchen, director of equity trading at
ScotiaMcLeod. "It's a serious condition and until they get this
fixed up, these are the kinds of days that we're going to have
to look forward to."
    Most of Canada's 10 main sectors were down more than 1
percent. The powerhouse financial services group led declines,
falling 2.1 percent as investors worried about the exposure of
Canadian lenders to risky European debt holdings.
    Losses were sharpest among the country's largest banks, with
Royal Bank of Canada falling 2.3 percent to C$51.18,
Bank of Nova Scotia down 2.5 percent at C$50.86, and
Toronto-Dominion Bank dropped 1.4 percent to C$78.84.
    Mining stocks also fell sharply, with the heavyweight
materials sector plunging nearly 2 percent as base metals and
gold prices sank as euro zone concerns weighed on the outlook
for metals demand.  
    "When it looks as though there will be less demand simply
because of falling economic expansion, then I can understand why
the prices would be down in the manner in which they are," said
    Declines were led by Potash Corp, down 1.6 percent
to C$45.28, Barrick Gold, which fell 1.6 percent to
C$34.39, Teck Resources, off 3.3 percent at C$29.58,
and First Quantum Minerals, which fell 3.6 percent to
    At 10:50 a.m. EDT (1450 GMT), the Toronto Stock Exchange's
S&P/TSX composite index was down 144.03 points, or 1.2
percent, at 11,478.88. At one point the index touched 11,416.49,
its lowest level since July 12.
    The TSX was also on track for its biggest one-day percentage
drop since plunging 3 percent on June 21.
    The gloomy picture was compounded on concerns over Greece's
future within the euro zone have also resurfaced ahead of the
visit to Athens by a group of international lenders on Tuesday.
They must decide if the government has done enough to qualify
for further rescue payments and avoid a chaotic default.
    Despite a big drop in oil prices on Monday, Canada's energy
sector remained in positive territory, up 0.6 percent, on the
strength of a couple of prominent acquisitions of Canadian oil
and gas firms by Chinese energy giants.
    Shares of Nexen Inc surged more than 50 percent to
C$26.44 on Monday after China's state-owned oil company CNOOC
 announced it plans to buy the Canadian rival for $15.1
billion. CNOOC said it would pay $27.50 cash per share, a 61
percent premium to Nexen's closing price in New York on Friday
    Offshore producer CNOOC said it would pay $27.50 cash per
share, a 61 percent premium to Nexen's closing price on Friday.
    "That's a fairly substantial premium that CNOOC has paid for
this situation," said Ketchen. "Nexen shareholders have got to
be happy about that."
    In a separate deal, China's top refiner Sinopec Corp said on
Monday it has agreed to buy a 49 percent stake in the UK unit of
Canada's Talisman Energy Inc for $1.5 billion. Shares
of Talisman, Canada's No. 5 independent oil producer, jumped 7
percent to C$11.82.