CANADA STOCKS-TSX halts slide as miners rally on stimulus hopes

Wed Jul 25, 2012 4:57pm EDT
 
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* TSX ends up 25.56 pts, or 0.2 pct, at 11,492.51
    * Mining stocks boosted by stimulus hopes
    * Financial shares lead losses
    * Weak U.S., Europe data weigh on markets
    * Earnings from top Canadian cos disappoint

    By Jon Cook
    TORONTO, July 25 (Reuters) - Canada's main stock index
halted its three-day skid on Wednesday, rising with mining
shares as investors were hopeful that deteriorating global
economic conditions would spur stimulus moves by central banks
in the United States and Europe.
    Weak data from the United States and Europe raised
expectations the Federal Reserve and European Central Bank would
announce more monetary easing measures when they hold meetings
next week.
    ECB Governing Council member Ewald Nowotny said there were
arguments for giving Europe's new permanent rescue fund a
banking license, enabling it to borrow unlimited central bank
money and so boosting its capacity to prevent the crisis from
spreading. 
    "We've seen this phase for the past couple summers, where
the economic data starts coming in a little bit weaker and the
market turns to central banks for more gas in the engine," said
Craig Fehr, Canadian market strategist at Edward Jones in St.
Louis, Missouri.
    The news was welcomed by Canada's beaten-down materials
sector, which climbed 1.5 percent as gold mining stocks rallied
with bullion prices. 
    Top gold producers led the way, with Goldcorp jumping
3.5 percent to C$34.84 and Barrick Gold up 2.2 percent
at C$34.49.
    Energy shares also turned higher, edging up 0.1 percent as
oil prices rebounded on increased Middle East turmoil and hopes
for further Fed stimulus. 
    Suncor Energy -- Canada's largest oil producer --
led gains, rising 3.7 percent to C$30.87 a day after reporting a
28 percent jump in second-quarter profit. The company also said
on Wednesday it will no longer commit to an ambitious growth
program that had troubled some shareholders. 
    Oil gains were nearly offset by weak earnings from Cenovus
Energy, whose shares slid 3 percent to C$31.15 after
the oil firm reported a 40 percent drop in second-quarter profit
and called off its search for a partner to help develop the
Telephone Lake oil sands project in Alberta. 
    TransAlta Corp shares tumbled 3.5 percent to C$15.60
after the oil and gas firm said it estimates a loss in the
second-quarter compared with a year earlier. 
    The Toronto Stock Exchange's S&P/TSX composite index
 ended up 25.56 points, or 0.2 percent, at 11,492.51.
    In the latest sign the American recovery was faltering, data
on Wednesday showed U.S. single-family home sales in June fell
by the most in more than a year. 
    In Europe, German business sentiment dropped to its lowest
level in over two years, reinforcing the view that even the euro
zone's biggest economy was being damaged by the debt crisis.
 
    The news comes on the heels of a decision by ratings agency
Moody's Investors Service to revise Germany's credit outlook to
negative from stable.
    "It looks like Germany will avoid a recession, but the
question is for how long?" said Pat McHugh, Canadian equity
strategist at Manulife Asset Management. "The economic news just
keeps getting worse."
    Canada's powerhouse financial services sector led declines,
dipping 0.4 percent. Leading losses was Royal Bank of Canada
, down 0.8 percent to C$50.39, Bank of Nova Scotia
, off 1.1 percent at C$50.61, and Toronto-Dominion Bank
, which sagged 0.4 percent to C$78.08.
    
    WEAK EARNINGS
    Second-quarter earnings from Canada's largest diversified
miner, railroad and grocery store chain also failed to excite.
    Teck Resources Inc plunged 7.3 percent to C$27.27
after the miner said lower coal and metal prices contributed to
a steeper-than-expected drop in quarterly profit and that it
sees no reprieve anytime soon. 
    Shares of Loblaw Cos Ltd fell 1.5 percent to C$31.45
after the grocer reported lower quarterly profit on Wednesday,
as sales growth lagged an increase in expenses. 
    Even Canadian National Railway Co, which reported a
17 percent rise in second-quarter profit, saw its shares slide
0.5 percent to C$86.83. 
    However, shares of Canadian Pacific Railway, CN's
main competitor, jumped 5.2 percent to C$78.97 after reporting
its second-quarter net income rose to C$631 million from C$538
million a year earlier. 
    While mostly disappointing, Edward Jones' Fehr said the
earnings were consistent with the "sluggish" economic backdrop.
    "The market is readjusting to the new earnings growth pace
that we're likely to see for the next couple of quarters," he
added.