CANADA STOCKS-TSX weakens, but Fed move pulls it off day's low

Wed Nov 3, 2010 4:33pm EDT
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   * TSX down 10.30 points, or 0.08 percent, at 12,671.12
 * Fed to buy $600 bln of bonds by end of Q2 2011
 * Focus on Potash Corp gov't decision
 (Updates to close, adds quote)
 By Jennifer Kwan
 TORONTO, Nov 3 (Reuters) - Toronto's main stock index
closed lower on Wednesday, but well off its session low after
the U.S. Federal Reserve committed to buy $600 billion more in
government bonds to revive the U.S. economy.
 The U.S. central bank launched its controversial new policy
on Wednesday, committing to buy about $75 billion in
longer-term Treasury bonds per month. [ID:nN03287174]
 The decision is aimed at further lowering borrowing costs
for consumers and businesses still suffering in the aftermath
of the worst recession since the Great Depression.
 Right after the decision was released, the Toronto Stock
Exchange's S&P/TSX composite index .GSPTSE see-sawed,
rallying, selling off and firming again.
 It ended down 10.30 points, or 0.08 percent, at 12,671.12,
more than 100 points higher than its low of the day at
 "The mystery was actually the early sell-off, which I think
was some profit-taking and taking some risk off the table ahead
of the announcement," Francis Campeau, broker at MF Global
Canada, said referring to the pre-announcement market action.
 "Now that the Street is satisfied with what the Fed said
they're simply coming back into the market," he said of the
subsequent rally.
 Elvis Picardo, analyst and strategist at Global Securities
in Vancouver, said "the knee-jerk reaction was that the Fed
move would be positive for the markets," but at the same time
markets had already priced in the news and that is why trade
may have been choppy.
 The materials sector, down 0.5 percent, was a key source of
weakness on the TSX index as the price of gold dropped. [GOL/]
 Barrick Gold ABX.TO was off 1 percent at C$48.68, while
Goldcorp G.TO sank 1.1 percent to C$44.89.
 Fertilizer companies remained in the spotlight with a
crucial ruling from the Canadian government scheduled for after
the market close on Wednesday on whether to allow BHP
Billiton's $39 billion takeover bid for Potash Corp POT.TO to
go ahead. Potash shares were largely flat, down 0.04 percent at
 Agrium AGU.TO skidded 2.7 percent to C$85.59 after the
farm products retailer reported quarterly results that missed
market expectations. [ID:nN02163884]
 ($1=$1.01 Canadian)
 (Reporting by Jennifer Kwan; editing by Jeffrey Hodgson)