CANADA STOCKS-TSX falls on Draghi comments; miners pare losses

Thu Aug 2, 2012 2:57pm EDT
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* TSX down 85.19 pts, or 0.7 pct, at 11,533.34
    * Energy shares lead losses on weak earnings results
    * ECB's Draghi disappoints with no new stimulus

    By Jon Cook
    TORONTO, Aug 2 (Reuters) - Canada's main stock index slid in
volatile trade on Thursday afternoon, led by energy shares,
after European Central Bank President Mario Draghi disappointed
investors by not announcing immediate action to push down
borrowing costs for struggling euro zone members.
    Stocks tumbled and the euro erased gains after Draghi
indicated the ECB may again start to buy government bonds, but
only if euro zone members activated the euro zone's bailout
funds to also buy bonds. 
    Investors had hoped for more immediate action, particularly
after the Federal Reserve on Wednesday embraced a similar
wait-and-see approach and did not announce any new stimulus
measures to boost U.S. growth.  
    "The market was expecting something a bit more dramatic
today," said Craig Fehr, Canadian market strategist at Edward
Jones in St. Louis, Missouri. "It has grown a little weary of
the talk and is looking for action at this point."
    Canada's heavily weighted energy sector led the broader
index lower, falling 1.8 percent. A combination of lower oil
prices and weak earnings results from Enbridge Inc and
Petrominerales Ltd hurt energy shares.
    Enbridge slid 1 percent to C$40.11 after the pipeline
operator reported a sharp fall in second-quarter profit due to
losses on financial derivatives. 
    Petrominerales Ltd shares plummeted more than 17
percent to C$7.64 after the oil and gas producer's
second-quarter adjusted profit fell 66 percent on lower oil
prices and sales. 
    Around 2:30 p.m. (1830 GMT), the Toronto Stock Exchange's
S&P/TSX composite index was down 85.19 points, or 0.7
percent, at 11,533.34. The index had touched a session low at
11,475.43 shortly after Draghi's remarks.
    Fehr said the market will "play a little wait and see" after
Draghi's comments hinted that the ECB was "in the process of
formulating a plan for some additional stimulus."
    Canada's influential materials sector, which includes
miners, edged down 0.3 percent. Losses were led by Potash Corp
, which fell 3.3 percent to C$42.48.
    Kinross Gold Corp tumbled 3.6 percent to C$7.72 after
the company, one of Canada's largest gold miners, said on
Wednesday it had replaced long-time CEO Tye Burt, who
spearheaded the Red Back Mining acquisition, which has so far
failed to live up to expectations. Kinross, which reports
second-quarter results next week, named Paul Rollinson as the
new chief executive. 
    "The difference between the gold bullion price increase and
the lack of increase in the gold stocks is money that's just not
gone to shareholders - it's gone into dead projects and poor
investment decisions," said Mike Newton, portfolio manager at
Macquarie Private Wealth Inc.
    First Quantum Minerals Ltd, jumped 6.1 percent to
C$19.03 after the base metal miner said on Wednesday its
second-quarter profit fell slightly as lower copper prices and
higher production costs outweighed higher sales volumes of
copper and gold. On Thursday, National Bank Financial raised its
price target on the miner to C$23 from C$21. 
    Shares of New Gold Inc climbed 2.2 percent to
C$10.22 a day after the miner reported a lower second-quarter
profit, but the number was in line with expectations.
    In other earnings news, shares of Valeant Pharmaceuticals
International rose 1.1 percent to C$47.66 after the
drugmaker reported a second-quarter net loss on Thursday as
costs rose, but adjusted cash earnings rose and the company
raised its forecast for full-year cash results.