CANADA STOCKS-Nexen deal helps TSX avoid bigger loss

Mon Jul 23, 2012 4:57pm EDT
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* TSX ends down 77.37 pts, or 0.7 pct, at 11,545.54
    * Financials, mining shares lead losses
    * Fears about Spain, Greece rattle markets
    * Nexen Inc surges 50 pct after takeover bid
    * Energy stocks climb 2.3 pct on deal activity

    By Jon Cook
    TORONTO, July 23 (Reuters) - Canadian stocks finished lower
on Monday, led by financial and mining shares, as events in
Spain threatened to escalate Europe's debt crisis, but a
$15.1-billion takeover bid for Nexen Inc boosted energy
stocks and helped the index avoid bigger losses.
    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.
    "There's a degree of fatigue with this whole Europe
situation which has been weighing on equity markets for months,"
said Elvis Picardo, strategist at Global Securities in
    Nine of Canada's 10 main sectors fell on Monday. Declines
were led by the powerhouse financial services group, which
dropped 1.6 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 1.7 percent to C$51.52,
Bank of Nova Scotia down 1.5 percent at C$51.39, and
Toronto-Dominion Bank dropped 1.2 percent to C$79.05.
    Mining stocks also fell sharply, with the heavily weighted
materials sector sliding 2 percent as euro zone concerns weighed
on the outlook for demand for base metals and gold. 
    "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
Fred Ketchen, director of equity trading at ScotiaMcLeod.
    Among the biggest decliners were Barrick Gold,
which fell 2.3 percent to C$34.13; Goldcorp, down 1.7
percent at C$33.47; Teck Resources, off 2.6 percent at
C$29.80; and First Quantum Minerals, which tumbled 4
percent to C$17.23.
    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. 
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 77.37 points, or 0.7 percent, at
11,545.54. The index rallied after hitting 11,416.49, its lowest
since July 12.
    Despite a big drop in oil prices on Monday, Canada's energy
sector remained in positive territory, up 2.3 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 close at
C$26.35 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. 
    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
    "That's two big Canadian majors that have attracted
significant overseas buyers in the space of a day," said
Picardo. "That bodes well in terms of at least putting a floor
below Canadian energy stocks for the next little while." 
    Other oil and gas firms catching bids, included: Encana Corp
, up 3.7 percent to C$21.53; Cenovus Energy,
which rose 2.2 percent to C$33.25; and Meg Energy Corp,
which climbed 2.7 percent to C$39.51.
    In other news, Research In Motion Ltd was up 1.5
percent to C$6.97 after a regulatory filing showed Canadian
investor Prem Watsa has become the embattled BlackBerry maker's
largest known shareholder, nearly doubling his stake to nearly
10 percent. Watsa is the chief executive of insurer and
investment company Fairfax Financial Holdings Ltd and a
RIM board member since January.