CANADA STOCKS-TSX tumbles as ECB joins Fed on sidelines

Thu Aug 2, 2012 5:01pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* TSX ends down 112.03 points, or 1 pct, at 11,506.50
    * Energy shares lead losses on weak earnings results
    * ECB's Draghi disappoints with no new stimulus
    * Petrominerales shares plummet 18 pct

    By Jon Cook
    TORONTO, Aug 2 (Reuters) - Canadian stocks fell for a fourth
straight day on Thursday, led by energy and financial shares, as
the European Central Bank followed the U.S. Federal Reserve in
pouring cold water on expectations of further stimulus to boost
the global economy.
    After last week's pledge by ECB President Mario Draghi to
"do whatever it takes" to save the euro, expectations for strong
action had been running high. 
    "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."
    The Fed took a similar wait-and-see approach on Wednesday
and did not announce any new stimulus measures to help revive a
flagging U.S. recovery.
    Canada's heavily weighted energy sector fell 2 percent, hut
by lower oil prices and by weak earnings results from Enbridge
Inc and Petrominerales Ltd.
    Enbridge slid 1.5 percent to C$39.90 after the pipeline
operator reported a sharp fall in second-quarter profit due to
losses on financial derivatives. 
    Petrominerales Ltd shares plummeted more than 18
percent to C$7.53 after the oil and gas producer's
second-quarter adjusted profit fell 66 percent on lower oil
prices and sales. 
    Canadian financials slid 0.8 percent after the ECB news.
Losses were led by top lenders Bank of Nova Scotia,
down 1.2 percent at C$51.36, Toronto-Dominion Bank,
which fell 0.9 percent to C$77.99 and Bank of Montreal,
off 1.1 percent at C$56.82. 
    The Toronto Stock Exchange's S&P/TSX composite index
 finished down 112.03 points, or 1 percent, at
11,506.50. The index touched 11,475.43, the lowest level since
July 25, shortly after Draghi's remarks.
    Draghi said any government bond buying would not come before
September, and only if governments activated the euro zone's
bailout funds to join the ECB in buying bonds. 
    "The market will like that there's not going to be a
short-term freeze on banks," said Rick Meslin, head of Canadian
equities at UBS Securities Canada. "I don't think the market is
satisfied yet that the governments of Europe have gotten
together with a cohesive plan."
    Canada's influential materials sector, which includes
miners, slid 0.8 percent. Losses were led by Potash Corp
, which fell 2.3 percent to C$42.91.
    Kinross Gold Corp tumbled 5.6 percent to C$7.56 after
the company, one of Canada's largest gold miners, said on
Wednesday it had replaced long-time CEO Tye Burt, who
spearheaded the disappointing Red Back Mining acquisition.
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.
    On a positive note, First Quantum Minerals Ltd,
jumped 6.1 percent to C$19.03 a day after the base metal miner
said its second-quarter profit fell slightly, but revenues rose.
On Thursday, the company announced plans to invest more than $4
billion in a new mine and expansion projects in Zambia.
    "When other companies want to go ahead with something their
stocks get drilled," said Meslin. "If you look at the majors out
there, this is the only independent that has legitimate
production growth and people pay for that."           
    Shares of New Gold Inc climbed 1.3 percent to
C$10.13 after the miner on Wednesday reported a second-quarter
profit that was in line with expectations. 
    In other company news, Rona Inc shares rose 2.6
percent to C$13.95 a day after U.S. retailer Lowe's Cos Inc
 offered to buy its Canadian rival for C$1.8 billion
($1.8 billion).