CANADA STOCKS-TSX reverses course as materials weigh

Thu Jun 2, 2011 12:46pm EDT
 
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   * TSX falls 0.18 percent to 13,503.30
 * Six of 10 main sectors decline, materials lead way
 * Friday's U.S. nonfarm payrolls awaited
 * Progress Energy stock jumps on C$1.07 bln deal
 (Updates to midday)
 By Ka Yan Ng
 TORONTO, June 2 (Reuters) - Toronto's main stock index
turned lower on a reversal in the resource groups as caution
about the global economy took the steam out of an early rally.
 The index, which recorded a drop of nearly 2 percent on
Wednesday -- its biggest one-day slide since Aug. 11 -- got a
short-lived boost from its hefty energy and materials groups.
 By midday, both sectors were well off the day's highs, with
materials, down 0.86 percent, leading the slide after a wave of
technical selling hit both gold and silver futures. [GOL/]
 The energy sector was up 0.06 percent, having erased nearly
all of its early gains. The retreat came as U.S. crude futures
extended losses and moved below the 100-day moving average,
reacting to a government report showing a surprise rise in U.S.
crude stockpiles last week. [O/R]
 Barrick Gold (ABX.TO: Quote) and Goldcorp (G.TO: Quote) were the biggest
drags on the index, helping to send the gold subgroup down more
than 1 percent. Barrick dropped 2.23 percent to C$45, while
Goldcorp shed 1.33 percent to C$47.51.
 Silver Wheaton (SLW.TO: Quote) slipped 2 percent to C$34.36, and
Imperial Oil (IMO.TO: Quote) lost 1.6 percent to C$45.91.
 At 12:30 p.m. (1630 GMT), the Toronto Stock Exchange's
S&P/TSX composite index .GSPTSE was down 24.58 points, or
0.18 percent, at 13,503.30. Six of the index's 10 main sectors
were lower.
 "It just speaks to the nervousness or the sense of
uncertainty that investors currently feel," said Elvis Picardo,
analyst and strategist at Global Securities in Vancouver.
 "We haven't been able to post a sustainable rally for a few
days now. I think the bears currently have the upper hand in
the short term."
 While new U.S. claims for unemployment benefits fell by
6,000 last week to a seasonally adjusted 422,000, the labor
market by most accounts remains weak. The figure comes ahead of
Friday's key U.S. nonfarm payrolls report for May.
[ID:nOAT004815] [ID:nN31283560]
 Recent data ranging from consumer spending to manufacturing
has suggested the U.S. and other global powerhouse economies,
are hitting a soft patch.
 "There are more cracks opening up in the economic side,
especially in the States. We've seen a clear deterioration in
the numbers in the last few weeks," said Andrew Pyle, an
associate portfolio manager at ScotiaMcLeod.
 "Clearly, if the U.S. employment numbers are not good, then
that's just going to be one more element of concern in the
market."
  Markets are already gearing up for a soft read on the U.S.
labor market, confirming the economy's loss of momentum as it
grapples with a raft of headwinds ranging from high energy
prices and bad weather to supply chain disruptions due to the
earthquake in Japan. [ID:nN31283560]
 In individual company news, Laurentian Bank (LB.TO: Quote) fell
3.56 percent to C$49.81 after it reported stronger results but
missed expectations. [ID:nN02247242]
 Progress Energy  (PRQ.TO: Quote) jumped 4.43 percent to C$14.60
after it said it will sell half its working interest in a North
Montney joint venture to Malaysia's state oil firm Petronas for
C$1.07 billion to develop its large shale assets in British
Columbia. [ID:nL3E7H21VB]
 ($1=$0.98 Canadian)
 (Reporting by Ka Yan Ng; editing by Rob Wilson)