CANADA STOCKS-Soft data, commodity prices take TSX to 1-week low

Fri May 31, 2013 5:16pm EDT
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* TSX falls 96.13 points, or 0.8 percent, to 12,650.42
    * Nine of 10 main sectors decline
    * Index on track for monthly gain
    * Rainy River soars after bid from New Gold
    * RBC slips, market's biggest negative influence

    By Solarina Ho
    TORONTO, May 31 (Reuters) - Canada's main stock index
retreated sharply on Friday as lower commodity prices triggered
a slump in shares of natural resource companies and weak
economic data out of Europe and the United States dampened
investor sentiment.
    While almost every major sector declined, the index still
looked on track for a gain in May, reversing losses in the
previous two months. 
    South of the border, U.S. stocks ended down 1 percent on
Friday, but all three index were positive for the month, with
the S&P 500 rising 14.34 percent so far this year - its
best first five months since 1997.
    The TSX, which is up about 1.6 percent this month and 1.7
percent for 2013, slipped 0.2 percent on the week.
    "It wasn't really surprising to see a degree of
profit-taking on the last day of the month," said Elvis Picardo,
strategist and vice president of research at Global Securities.
    The Toronto Stock Exchange's S&P/TSX composite index
 finished 96.13 points, or 0.8 percent lower, at
12,650.42, after falling as low as 12,620.08 earlier.
    Data showed that unemployment reached a new high in the euro
zone and inflation remained well below the European Central
Bank's target. U.S. consumer spending fell in April for the
first time in almost a year and inflation pressures were
subdued, pointing to a slowdown in economic activity.
    The commodities-exporting market, which has been hit sharply
this year by volatility in resource prices, reacts to global
economic trends because of its large exposure to materials and
energy stocks.
     "You boil all this (data) together and you get an economic
stew around the world that continues to be one of positive
growth, but certainly not as quick as most investors would like
or up to capacity," said Craig Fehr, Canadian market strategist
at Edward Jones in St. Louis, Missouri. 
    The growth prospects for the global economy look better in
the second half of the year than in the first half, Fehr said. 
    "As the global growth story starts to improve, Canada's
stock market and the economy should benefit from that," he
    Official data showed rising exports helped rouse the
Canadian economy from a sluggish second half of 2012 to grow at
an annualized rate of 2.5 percent in the first quarter, the
fastest pace in six quarters. 
    Nine of the index's 10 main sub-groups stumbled into
negative territory.
    The materials sector, which includes mining stocks, shed 0.6
percent. The prices of commodities such as gold and silver
    In company news, New Gold Inc agreed to acquire
gold exploration company Rainy River Resources Ltd for
about C$310 million ($301 million) to expand its asset base in
    New Gold shares fell 8 percent to C$7.05, but Rainy River
surged 34.8 percent to C$3.64.
    A drop in oil prices pulled energy shares down 0.9 percent.
 Canadian Natural Resources Ltd slipped 3.3
percent to C$30.90. Suncor Energy gave back 1.9 percent
to C$31.45.
    Financials, the index's most heavily weighted sector, gave
back 1 percent.
    Royal Bank of Canada extended Thursday's losses amid
uncertainty about its future growth after it reported in-line
quarterly results. Canada's biggest bank lost
2.1 percent to C$61.53 and played the biggest role of any single
stock in leading the market lower.