CANADA STOCKS-TSX dives for 2nd day as commodities exit

Tue Apr 12, 2011 5:13pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

 * TSX ends down 195.46 points, or 1.4 pct, at 13,801.40
 * Eight of 10 main sectors weaker
 * Oil, gold, base metals all tumble
 (Adds details, comments)
  By Claire Sibonney
  TORONTO, April 12 (Reuters) - Toronto's main stock index
closed sharply lower for a second day on Tuesday, hitting its
weakest point in nearly four weeks, as energy and mining shares
were battered by a broad commodities selloff.
  Energy shares led the way down, dropping 3 percent, as
U.S. crude oil futures fell more than $3 a barrel to around
$106. Oil was hit hard after the International Energy Agency
warned high prices could crimp demand and Goldman Sachs said
Brent oil, the market price leader, could drop in coming
months. [O/R] [ID:nN12116926]
  Suncor Energy (SU.TO: Quote) slid 3.4 percent to C$42.05,
Canadian Natural Resources (CNQ.TO: Quote) shed 2.7 percent to
C$44.34, and Canadian Oil Sands Trust COS.TO sank 4.3 percent
to C$31.02. [O/R]
 "In general you're seeing risk aversion across the board,"
said Youssef Zohny, portfolio manager at Van Arbor Asset
Management in Vancouver.
 "Quite a bit of uncertainty there, namely energy prices'
effect on the consumer and profit margins, and the end of (the
U.S. Federal Reserve's) quantitative easing as well, which is
coming up in June."
 Zohny also noted that the IMF this week  downgraded some of
its growth forecasts for 2011.
 Base-metal miners pulled back 2.9 percent on the back of
weaker copper prices as Japan raised the severity of the
Fukushima nuclear disaster to the highest level, equal to that
of the Chernobyl disaster in 1986. [MET/L] [ID:nL3E7FB2TZ]
 Teck Resources (TCKb.TO: Quote) tumbled 3.6 percent to C$51.87,
while First Quantum Minerals (FM.TO: Quote) dropped 4.7 percent to
C$124.90.
 "Some of the speculative froth may be coming out (of
commodity prices)," said Craig Wright, Royal Bank of Canada's
chief economist. "But there is still a lot of liquidity
sloshing around the system and it's still looking for yield."
 Wright said that if global growth moderates, then that
should translate into more stable commodity prices and take
some of the speculative pressure off commodities.
 The index's overall materials sector was down 1.7 percent
and was also hit by disappointment over aluminum-maker Alcoa's
(AA.N: Quote) results, with its revenue missing forecasts.
[ID:nN12176524]
 "Alcoa had some decent earnings but market expectations
were a bit higher," Zohny said.
  He said the results created some uncertainty about the
robustness of Canadian quarterly earnings, which start coming
out in the next few weeks.
  The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE closed down 195.46 points, or 1.4 percent, at
13,801.40, hitting its lowest level since March 17.
 Eight of the TSX's 10 main sectors were lower, including
financials, which fell nearly 1 percent. The gold-mining
sub-sector lost 0.7 percent as the oil-price retreat continued
to dim some of gold's safe-haven attraction. [GOL/]
  Zohny said that although the index has slipped below its
50-day moving average, it still holding in the range it has
been trading in since February.
 "If we're able to generate a rally towards the end of the
week then I think we're probably just in some sort of normal
correction. But if we were to end the week at our lows,
essentially I would start to question the uptrend," he said.
 ($1=$0.96 Canadian)
 (Additional reporting by Scott Haggett in Calgary; editing by
Peter Galloway)