CANADA STOCKS-TSX drops hard as markets stagger after Fed hit

Thu Jun 20, 2013 11:38am EDT
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* TSX falls 199.35 points, or 1.62 percent, to 12,068.94
    * All 10 main index sectors decline
    * Gold-mining shares drop 5 percent
    * Bombardier down 2.2 percent after rival wins orders

    By John Tilak
    TORONTO, June 20 (Reuters) - Canada's main stock index
recorded its sharpest fall in more than two months on Thursday,
joining a global market selloff triggered by the U.S. Federal
Reserve's signal that it may exit its bond buying program and by
sluggish Chinese data.
    Every major sector of the index was in the red, with the
materials group falling the hardest, dropping 4.5 percent as
falling bullion prices hit gold-mining stocks.
     U.S. Fed Chairman Ben Bernanke said on Wednesday the U.S.
economy is expanding strongly enough for the central bank to
begin slowing the pace of its bond-buying stimulus later this
    Investors also reacted to data that showed Chinese factory
activity weakened to a nine-month low in June as demand
faltered, heightening the risk of a sharp second-quarter
     Thursday's decline was the Toronto stock index's
third-biggest one-day percentage fall this year and its steepest
since April 15. 
    "There's a reassessment and a repricing taking place," said
Stephen Wood, chief market strategist, North America, at Russell
Investments. "The markets are trying to price in what assets are
worth in a world where the Fed is closer to tapering than
further away."
    The Toronto Stock Exchange's S&P/TSX composite index
 was down 199.35 points, or 1.62 percent, at 12,068.94.
    Market analysts said uncertainty about exactly when the
Fed's stimulus pullback will begin also played on investors'
    "Many market corrections are caused by the unknown," said
Allan Small, senior investment advisor at Dundee Wealth.
    "Once we know what's happening, the market can deal with it,
swallow it, figure out how to move forward," he added. "The
problem is we're up in the air about when (the Fed) is going to
start tapering, by how much, and how quickly."
     Financials, the index's most heavily weighted sector, were
down 0.7 percent. In the group, Royal Bank of Canada,
the country's biggest lender, slipped 1.5 percent to C$59.81 and
played the biggest role of any single stock in leading the
    Energy shares gave back 1.7 percent, with lower oil prices
further weighing on sentiment. Suncor Energy Inc 
was down 1.5 percent C$31.05.
    The materials sector, which includes mining stocks, lost 4.5
percent as gold miners fell 5 percent. The price of bullion
slumped to a 2-1/2 year-low, also hurt by the Fed. 
    Barrick Gold Corp lost 5.7 percent to C$17.50, and
Goldcorp Inc fell 5.2 percent to C$25.53.
    Rona Inc said it has struck a deal to sell its
plumbing, heating, ventilation and air conditioning business to
Emco Corp and expects net proceeds of C$215 million. The home
improvement chain's stock fell 1.3 percent to C$10.11.
    The market also reacted to signs at the Paris Airshow this
week that Bombardier's shift upmarket may be backfiring as its
arch-rival in the small passenger jet category, Embraer, piled
on orders for an upgraded plane and a new Japanese challenger
vowed to win business. Bombardier shares were down 2.2
percent at C$4.53.