November 3, 2010 / 9:14 PM / in 7 years

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

   * 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, Ottawa's decision  (Adds details, company news)
 By Jennifer Kwan
 TORONTO, Nov 3 (Reuters) - Toronto's main stock index closed lower on Wednesday, but well off its session lows, 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, but more than 100 points above its low for the day at 12,569.44.
 The blue chip S&P/TSX 60 index .TSE60 closed 1.37 points lower, or 0.19 percent, at 726.09.
 "The mystery was actually the early selloff, which I think was some profit-taking and taking some risk off the table ahead of the announcement," said Francis Campeau, a broker at MF Global Canada, referring to the market's retreat before the Fed announcement.
 "Now that the Street is satisfied with what the Fed said, they're simply coming back into the market," he said of the subsequent rebound.
 Elvis Picardo, an 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.
 Markets were generally priced for the Fed to initially commit to buying at least $500 billion in Treasuries over several months. [FRX/]
 The materials sector, down 0.5 percent, was a key source of weakness on the TSX 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 whether to allow BHP Billiton's $39 billion takeover bid for Potash Corp (POT.TO) to go ahead. Potash shares were largely flat, ending down 0.04 percent at C$146.21.
 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]
 Elsewhere, WestJet Airlines Ltd (WJA.TO) finished up 4.5 percent at C$13.37 after it unveiled the first dividend in its 14-year history on Wednesday. [ID:nSGE6A20J0]
 Enbridge Inc (ENB.TO), whose pipeline woes this summer disrupted North American oil markets, said its third-quarter profit almost halved, hurt by ruptures on two of its key pipelines. Enbridge shares were up 0.2 percent at C$56.15. [ID:nN02241818]
 ($1=$1.01 Canadian)  (Reporting by Jennifer Kwan; editing by Rob Wilson)                                        

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