CANADA STOCKS-TSX drops hard as markets stagger after Fed hit
* 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 year. 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 slowdown. 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' minds. "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 market. 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.
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