* 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) slid 3.4 percent to C$42.05, Canadian Natural Resources (CNQ.TO) 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 tumbled 3.6 percent to C$51.87, while First Quantum Minerals (FM.TO) 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) 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)