CANADA STOCKS-TSX falls on Europe woes; Nexen deal pares losses

Mon Jul 23, 2012 2:26pm EDT
 
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* TSX down 119.09 pts, or 1 pct, at 11,503.82
    * 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) - Canadian stocks fell on Monday,
led by financial and mining shares, as events in Spain and
Greece stoked fears about an escalation of Europe's debt crisis,
overshadowing energy gains after a $15.1-billion takeover bid
for Nexen Inc.
    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 percent as investors worried about what a broader
Spanish bailout would mean for the global financial system.
    Losses were sharpest among the country's largest banks, with
Royal Bank of Canada falling 2.2 percent to C$51.26,
Bank of Nova Scotia down 1.8 percent at C$51.19, and
Toronto-Dominion Bank dropped 1.9 percent to C$78.44.
    Mining stocks also fell sharply, with the heavyweight
materials sector sliding 2.1 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
Ketchen.
    Declines were led by Potash Corp, down 1.6 percent
to C$45.25, Barrick Gold, which fell 1.9 percent to
C$34.29, Teck Resources, off 3.2 percent at C$29.62,
and First Quantum Minerals, which fell 3.3 percent to
C$17.35.
    Risk assets were also pressured by concerns over Greece's
future within the euro zone which surfaced ahead of a visit to
Athens by a group of international lenders on Tuesday.
    The International Monetary Fund on Monday dismissed a
weekend news report that it may refuse to continue supporting
Greece as it prepares for talks with the new Greek government on
its international bailout. 
    At 2 p.m. EDT (1800 GMT), the Toronto Stock Exchange's
S&P/TSX composite index was down 119.09 points, or 1
percent, at 11,503.82. The index rebounded after earlier falling
to 11,416.49, its lowest since July 12.
    
    ENERGY DEALS LIMIT LOSSES
    Despite a big drop in oil prices on Monday, Canada's energy
sector remained in positive territory, up 1.3 percent, on the
strength of a couple of prominent acquisitions of Canadian oil
and gas firms by Chinese energy giants.
    Nexen's shares surged more than 50 percent to C$26.51 on
Monday after China's state-owned oil company CNOOC 
announced it plans to buy the Canadian rival for $15.1 billion -
China's richest foreign takeover bid yet. CNOOC said it would
pay $27.50 cash per share, a 61 percent premium to Nexen's
closing price in New York 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."
    The deal was quickly followed by another Chinese move on
Canadian-owned oil assets, as Sinopec Corp said it
would buy 49 percent of Talisman Energy's British unit
for $1.5 billion. Shares of Talisman, Canada's No. 6 oil and gas
exploration company, jumped nearly 7 percent to
C$11.81. 
    In other news, Research In Motion Ltd edged up 0.6
percent to C$6.91 after a regulatory filing showed Canadian
investor Prem Watsa has become the embattled BlackBerry maker's
largest known shareholder, nearly doubling his stake to just
under 10 percent. Watsa is the chief executive of insurer and
investment company Fairfax Financial Holdings Ltd and a
RIM board member since January.