March 10, 2011 / 10:30 PM / in 7 years

CANADA STOCKS-TSX dives 2 percent in global flight to safety

 * TSX ends down 246.13 points, or 1.8 pct, at 13,638.58  
 * All 10 main sectors lower; energy, materials lead fall
 * China data, Spain debt downgrade stoke growth concerns  (Updates to close, adds details, comments)
 By Claire Sibonney
 TORONTO, March 10 (Reuters) - Toronto’s main stock index retreated for a fourth-straight session on Thursday, chalking up its biggest drop in seven months as it reacted to disappointing economic data from China and a Spanish debt downgrade.
  The index’s powerhouse energy and materials sectors led the slide, down 2.6 percent and 2.8 percent, respectively, undermined by a sharp early drop in oil and metals prices, although some commodity prices regained ground on reports of unrest in oil-rich Saudi Arabia.
 Commodities priced in U.S. dollars such as oil, gold, and copper fell as the greenback rallied on safe-haven buying after Moody’s cut Spain’s credit rating. Also, figures that showed China ran a trade deficit in February underscored concerns about the robustness of global economic growth. [O/R] [GOL/] [MET/L]
 The events in Asia, Europe and the Middle East helped push down stock markets around the world, while bond prices soared in a safe-haven bid that analysts said could dominate markets in the near term.
 Among the biggest Toronto decliners, Suncor Energy (SU.TO) plunged 3.5 percent to C$41.67, Teck Resources TCKb.TO lost 2.3 to C$49.68, and Barrick Gold Corp (ABX.TO) declined 1.7 percent to C$49.13.
 ”We’re seeing some flight to safety and out of risky assets, so that’s putting a lot of pressure on stocks today, said Youssef Zohny, portfolio manager at Van Arbor Asset Management in Vancouver.
 “Overall it’s mostly macro factors driving the market, all negative.”
 The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended down 246.13 points, or 1.8 percent, at 13,638.58. The index was at its lowest point since Feb. 1 and all 10 of its main sectors were lower.
 The heavyweight financial group fell 1.3 percent with Royal Bank of Canada (RY.TO) down 2.3 percent at C$59.40.
 During the day, the TSX declined more than 2 percent, its biggest fall since August.
 Zohny said the index’s close below the 50-day moving average of 13,696 signaled the biggest danger to the market’s eight-month rally so far.
 He said the next significant support level is around the 200-day moving average of 12,585.
 “The next few weeks will determine if the uptrend has been severely disabled and we’re in a larger correction, but that’s not necessarily the case yet,” he said. “We’ll need a couple more weeks to sort what’s happening in the Middle East as well as overseas in Asia.”
 Barry Schwartz, vice president and portfolio manager at Baskin Financial Services, said that some investors are worried that key commodities such as oil and copper -- both of which have hovered around record-high levels for an extended period -- are getting too expensive and that they are taking profits as a result.
 “We’re doing the opposite,” he said. “We’ve just made orders to buy a large position in a mining company because they’re on sale -- 25 percent off. Some of these stocks are back to March or April 2010 prices, so we’re excited.”
 ($1=$0.98 Canadian)   (Reporting by Claire Sibonney; editing by Peter Galloway)                                        

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