CANADA STOCKS-TSX down on energy, banks; Valeant surges

Tue Sep 4, 2012 11:19am EDT
 
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* TSX down 22.77 points, or 0.18 percent, at 11,927.49
    * Banks and oil companies push index lower
    * Valeant surges 15 pct after announcing acquisition

    By Alastair Sharp
    TORONTO, Sept 4 (Reuters) - Canada's main stock index edged
lower on Tuesday morning, weighed down by heavyweight energy and
financial stocks and shrugging off a surging Valeant
Pharmaceuticals International Inc which said it would
buy a rival.
    Shares in Valeant, the largest publicly traded drug maker in
Canada, jumped more than 15 percent to C$58.33 after it
announced a $2.6 billion deal to take over U.S. dermatology
competitor Medicis Pharmaceutical Corp. 
    Valeant has been on an acquisition spree since its 2010
takeover by Biovail Corp, preferring growth through acquisitions
to heavily spending on research. 
    But the broader market was sluggish, with mining and energy
companies among the biggest decliners despite investors widely
expecting U.S. and European monetary easing that would boost
appetite for commodities.
    Financial stocks also pushed lower, with Royal Bank of
Canada down 0.7 percent at C$54.78. The banks gained
last week on surprising robust profit and dividend increases.
    At 10:52 a.m. (1452 GMT) the Toronto Stock Exchange's
S&P/TSX composite index was down 22.77 points, or 0.18
percent, at 11,927.49.
    The president of the European Central Bank, Mario Draghi,
told European lawmakers that purchases of short-term sovereign
bonds would not breach European Union rules, according to a
recording obtained by Reuters. 
    "You would think that commodity stocks and the cyclical
stocks would try to rally strongly on the back of that and
you're not seeing that kind of participation from these
sectors," said Sid Mokhtari, director of institutional equity
research at CIBC World Markets.
    That is partly because miners and oil companies have already
enjoyed a recent rally, he said. 
    "People bought ahead of the news -- the buy the rumor, sell
the news assumption," he said.
    The energy sector has gained 7.3 percent in the past three
months, the best performance of any of the top ten groups on the
index. 
    Adding to worries, manufacturing data out of the United
States showed a third straight month of contraction in August.