CANADA STOCKS-TSX rally fizzles on stimulus doubts

Mon Jul 30, 2012 5:09pm EDT
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* TSX down 8.48 pts, or 0.1 pct, at 11,757.88
    * Skepticism whether ECB, Fed will meet expectations
    * No details on action from Geithner, Schaeuble meeting

    By Jon Cook
    TORONTO, July 30 (Reuters) - Canadian stocks' three-day
rally ended on Monday, amid market concerns that any potential
stimulus measures announced this week by central bankers in the
United States and Europe may not be implemented right away.
    Investors were given a shot of adrenaline last week when
European Central Bank President Mario Draghi said the bank was
ready to do whatever was necessary, within its mandate, to save
the euro. 
    But some of the optimism for meaningful stimulus faded on
Monday after ECB insiders said bold actions, including resuming
ECB's bond-buying program and even pursuing quantitative easing,
are at least five weeks away. 
    "Draghi's comments were positive, but no one is willing to
bet the farm on any of these things happening," said Irwin
Michael, portfolio manager at ABC Funds. "The market remains in
'Sleepy Hollow' mode -- no-one is doing anything."
    Canada's resource-heavy Toronto Stock Exchange's S&P/TSX
composite index settled little changed, with half of
its 10 main sectors ending lower.
    Leading the declines were top oil producers Suncor Energy
, down 1.6 percent at C$31.39 and Cenovus Energy
, which fell 1.3 percent to C$31.15. Top fertilizer
maker Potash Corp dropped 2 percent to C$44.98 and
copper miner First Quantum Minerals shed 1.9 percent at
    Ivanhoe Mines Ltd slid 2.7 percent to C$8.54 after
Rio Tinto Plc  said on Monday it paid about $935
million for 133.6 million shares, or 51 percent of the stock the
Canadian miner put up in a rights offering. 
    Canadian Oil Sands Ltd edged down 1.2 percent to
C$20.74 after the pipeline company announced after the close on
Friday that its second-quarter profit sank 71 percent due to
major plant maintenance that reduced production, lower oil
prices and higher operating costs.    
    Shares turned lower after a meeting between U.S. Treasury
Secretary Timothy Geithner and Germany's Finance Minister
Wolfgang Schaeuble on Monday failed to produce any concrete
details about how the euro zone would tackle the debt crisis.
    Canadian financial shares slipped 0.1 percent after credit
ratings agency Standard & Poor's revised its outlook on Canada's
biggest banks down to "negative" from "stable." 
Toronto-Dominion Bank led losses, falling 0.6 percent to
    Manulife Financial Corp sank 0.9 percent to
C$10.70, as the market anticipated Canada's largest life insurer
will likely post a loss for the second quarter when it reports
later this week. 
    The TSX finished down 8.48 points, or 0.1 percent, at
11,757.88. The index retreated after touching 11,803.78, its
highest level since July 5.
    "A lot of people are watching as to whether Canada can get
through the 12,000 mark," said Sid Mokhtari, market technician
and director, institutional equity research, CIBC World Markets.
    The level remains a key "psychological" barrier for the
index, which last crossed the threshold back in early May.
    Losses were trimmed by gold miners, which were lifted by
hopes of further stimulus from the U.S. Federal Reserve. Barrick
Gold, the world's top gold producer, rose 1.9 percent
to C$33.10, Eldorado Gold was up 2.5 percent at
C$11.38, and Agnico Eagle rose 2.4 percent to C$44.44.
    Speculation has grown that the Fed will do more to bolster
the recovery after recent data on Friday showed U.S.
second-quarter gross domestic product expanded at a 1.5 percent
annual rate, the weakest pace since the third quarter of 2011.
But many believe the Fed will wait until September to provide
more stimulus.
    "Up until this morning the market was willing to give the
monetary authorities the benefit of the doubt that they'd
probably be doing some form of quantitative easing," said ABC
Funds' Michael.