May 14, 2010 / 9:08 PM / 7 years ago

CANADA STOCKS-TSX dragged lower by euro zone debt fears

* TSX falls 101.62 points, or 0.84 percent, to 12,014.97

* Gold shares rise, cushioning index's fall

* TSX composite up 2.8 percent for the week (Adds details, quote)

By Jennifer Kwan

TORONTO, May 14 (Reuters) - Toronto's main stock index capped a roller-coaster week with a sharp drop on Friday as investors worried that heavy euro zone debt loads could derail global economic recovery.

The worries pulled oil prices below $72 a barrel, spurring a 1.7 percent fall in the TSX's energy sector. [O/R] Suncor Energy (SU.TO) fell 2.4 percent to C$32.06, while EnCana Corp (ECA.TO) dropped 0.8 percent to C$33.09. Canadian Natural Resources (CNQ.TO) declined 0.2 percent to C$72.60.

European authorities announced creation of a massive debt safety net for Greece, Spain and Portugal this week, but markets remained skeptical that austerity plans in those countries will succeed. The doubt helped to knock the euro down to an 18-month low versus the U.S. dollar. [MKTS/GLOB] [FRX/]

"There's a lot of concern about the contagion effect from Europe's debt problems," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

"The thinking is that global growth is bound to suffer in this scenario, and that's what is also knocking down oil prices."

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended the session 101.62 points, or 0.84 percent, lower at 12,014.97, with six of its 10 main sectors dropping.

The index was up 2.8 percent for the week, however, with the lion's share of the gains notched in the first three days.

The financial sector fell 1.3 percent, with Royal Bank of Canada (RY.TO) down 1.1 percent at C$59.98, and Toronto-Dominion Bank (TD.TO) off 1.5 percent at C$73.39.

"There's a great deal of interrelationship between financials. If you've got a huge decline in confidence, people will look to do that sort of thing -- take some money off the table," said Fred Ketchen, director of equity trading at ScotiaMcLeod.

In addition to European jitters, financials were hurt by concerns about tighter regulation in the United States, a day after the U.S. Senate voted to limit fees charged on credit and debit card transactions. [ID:nN14139295] [ID:nN13100251]

The TSX's gold-mining subsector was up 1.8 percent, even as gold shied away from record highs near $1,250 an ounce on Friday. [GOL/]

Barrick Gold (ABX.TO), the world's No. 1 producer, rose 1.9 percent to C$47.08, and Goldcorp (G.TO) climbed 1.4 percent to C$47.14. Kinross Gold (K.TO) was up 1.7 percent at C$19.57.

In company news, Tim Hortons THI.TO said on Friday it is developing a strategy for expanding its restaurant chain outside of Canada and the United States. [ID:nN14191150] Its shares ended the day down 0.9 percent at C$35.15.

Toymaker Mega Brands Inc MB.TO returned to a first-quarter profit on Friday as the toymaker benefited from a gain related to its recent recapitalization plan. [ID:nN14102025] Its shares were up 7.8 percent at 55 Canadian cents.

The blue chip S&P/TSX 60 index .TSE60 closed 5.16 points lower, or 0.72 percent, at 706.72.

$1=$1.03 Canadian Reporting by Jennifer Kwan; editing by Rob Wilson

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