January 5, 2011 / 3:52 PM / in 7 years

CANADA STOCKS-TSX dragged lower by weaker commodities

 * TSX down 62.73 points at 13,339.58
  * Eight of 10 main sectors weaker
  * U.S. report shows surprising job gains
  * Commodity prices down for second day  (Updates with details, commentary)
 By Claire Sibonney
 TORONTO, Jan 5 (Reuters) - Toronto’s main stock index fell for a second day on Wednesday as commodity prices tumbled, weighed down by a stronger U.S. dollar, after a report showed a surprising surge in U.S. private sector job numbers.
 The hefty materials sector retreated 1.2 percent as base and precious metals were knocked lower. [MET/L] [GOL/]
 Among the top decliners were Barrick Gold Corp (ABX.TO), down 2.9 percent at C$50.12, Goldcorp Inc (G.TO), off 2.2 percent at C$43.54, and Silver Wheaton SLW.TO, which slumped 3.3 percent to C$35.43.
 U.S. private-sector employers added 297,000 jobs in December -- nearly triple forecasts -- and provided the most bullish signal in months that the U.S. economy is on the mend. [ID:nN05263495]
 “We saw a very strong job report out of the U.S. and that’s really strengthening the U.S. dollar, and that’s putting a lot of pressure on commodities today,” said Youssef Zohny, associate portfolio manager at Van Arbor Asset Management in Vancouver.
 At 10:24 a.m. (1524 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 62.73 points, or 0.5 percent, at 13,339.58. Eight of its 10 main groups were weaker, including financials, which dipped 0.1 percent.
 Zohny said he wouldn’t be surprised to see the economically sensitive bank stocks turn higher on the positive economic data, which hinted at better than expected official U.S. and Canadian employment data due on Friday.
 Zohny said the biggest risk right now is in shares of gold and silver producers.
 “The economic recovery is gaining a little bit of momentum and we got confirmation of that today ... It looks like profit-taking is turning into something a little bit more.”
 Oil, a key Canadian export that only a few days ago looked to be heading back up to $100 a barrel, hovered below $89 a barrel. [O/R]
 Energy stocks were down 0.6 percent, with Suncor Energy (SU.TO) 0.8 percent lower at C$37.72.
 “A lot of commodities had a very strong run into the year-end, so there’s quite a bit of speculation built up from last year, so it didn’t take much to really shake up the markets up a little bit,” Zohny added.
 “It looks like commodities in general are undergoing a little bit of a correction here.”
 ($1=$1 Canadian)  (Reporting by Claire Sibonney; editing by Rob Wilson)                                        

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