CANADA STOCKS-TSX falls after Fed cools stimulus hopes

Wed Aug 1, 2012 4:57pm EDT
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* TSX ends down 46.18 pts, or 0.4 pct, at 11,618.53
    * Financial, mining shares lead losses
    * Global factory data signals slowing growth
    * Fed stops short of offering new monetary stimulus
    * Attention shifts to ECB on Thursday

    By Jon Cook
    TORONTO, Aug 1 (Reuters) - Canada's main stock index slid on
Wednesday, led by mining and financial shares, as a slew of weak
manufacturing reports raised global growth fears, but hopes of
further stimulus measures from the U.S. Federal Reserve were
    The U.S. central bank dashed expectations among some
investors by taking no new measures, while Fed officials
acknowledged the American economy had "decelerated somewhat"
from the last time the bank's policy committee met in June.
    Risk assets have rallied lately and the S&P 500 
 posted its biggest two-day percentage gain of the year to
close out last week on increased expectations the Fed would
engage in another round of bond-buying, or quantitative easing,
to stimulate growth. 
    "U.S. stocks are trending higher so there is reluctance (for
the Fed) to try to stand against the trend," said Fergal Smith,
managing market strategist at Action Economics.
    Canada's resource-heavy index was led lower by the heavily
weighted materials sector, which fell 1.1 percent as gold and
copper extended losses after the Fed statement.  
    The most influential decliners included Potash Corp
, which fell 1.1 percent to C$43.92, Goldcorp Inc
, down 1.3 percent at C$35.74, Barrick Gold, off
1 percent at C$32.68 and Kinross Gold, which tumbled 4.4
percent to C$8.01.
    Mining stocks were also hurt by weak manufacturing data --
at home and abroad -- that showed global demand weakened last
    The euro zone's manufacturing sector contracted for the 11th
straight month in July, while China's official factory
purchasing managers' index fell to an eight-month low of 50.1 in
July, suggesting the sector is barely growing. 
    In North America, U.S. manufacturing contracted for a second
consecutive month and Canada's RBC Purchasing Managers' Index
posted its first decline in six months. 
    "We got another round of global data today where we saw PMIs
across the board mostly contract and that's evidence of the weak
global backdrop," said Smith.
    The Toronto Stock Exchange's S&P/TSX composite index
 finished down 46.18 points, or 0.4 percent, at
    Energy shares, which climbed 0.4 percent, helped pare some
losses on higher oil prices after data on Wednesday showed U.S.
crude oil inventories slumped last week, far more than forecast.
    Talisman Energy led gains, jumping more than 7
percent to C$13.31, despite the independent oil producer
reporting a 72 percent fall in second-quarter profit on
Wednesday. Talisman has been mentioned as a possible next target
in the aftermath of CNOOC Ltd's $15.1 billion friendly
bid for Nexen Inc. 
    Following the Fed disappointment, attention now turns to a
European Central Bank decision on Thursday. ECB President Mario
Draghi heightened speculation of further bank purchases of
Italian and Spanish bonds when he said last week that he would
do "whatever it takes to preserve the euro."
    "The ECB is much more important in terms of trying to find
some stability in Europe," said John Hughes, senior mining
analyst at Desjardins Securities.
    Canadian financial shares slid 0.7 percent, led by top life
insurers. Manulife Financial Corp -- Canada's largest
life insurer -- was down 2.6 percent at C$10.49.
    Intact Financial Corp tumbled 3.1 percent to
C$62.46, despite the property and casualty insurer reporting a
90 percent jump in operating profit for the second quarter on
    In other earnings news, shares of Maple Leaf Foods 
jumped 7.2 percent to C$10.72 after the food processor reported
a higher second-quarter profit on Wednesday as it reaped the
benefits of price increases for some products and an ongoing
effort to modernize its meat operations. 
    Catamaran Corp shares rose 4.8 percent to C$89.28
after the pharmacy benefit manager, formerly known as SXC Health
Solutions, reported a 27 percent rise in quarterly profit on