March 15, 2011 / 9:23 PM / in 7 years

CANADA STOCKS-Bottom feeders save TSX from steeper selloff

   * TSX ends down 72.23 points, or 0.5 pct, at 13,546.96
 * Falls as low as 13,237.93, weakest level since Jan. 25
 * Energy sector, base metals group rebound
 * Cameco Corp turns positive after steep slide  (Adds FOMC meeting reaction)
 By Claire Sibonney
 TORONTO, March 15 (Reuters) - Toronto’s main stock index recouped most of its big early losses on Tuesday as investors scooped up shares that had been beaten down by fears of a nuclear catastrophe in Japan.
 Worries about a radiation leak after an explosion at a quake-crippled Japanese nuclear power plant hammered world stock markets and fueled a broad selloff in commodities such as oil, base metals and even safe-haven golds as investors raced to cash and other liquid assets. [MKTS/GLOB] [ID:nL3E7EF3II]
 Toronto’s energy sector made a strong recovery, however, erasing most of the day’s losses to post a gain of 0.1 percent even though U.S. crude prices ended nearly 4 percent lower. Stronger natural gas prices helped somewhat. [O/R] [NGA/]
 Suncor Energy (SU.TO) was off 0.45 percent at C$41.90, but Canadian Natural Resources (CNQ.TO) rallied 2.1 percent to C$46.00.
 “It’s been a wild ride to say the least ... we’ve seen a bit of panic selling this morning and I think the Street maybe was getting short, and some value investors are coming back in the market,” said Francis Campeau, broker at MF Global Canada in Montreal.
 “It’s the first real dip we’ve seen since last September ... so some bottom pickers have come out and been buying it all day.”
 Base-metal miners also finished higher, up 1.5 percent, despite the price of copper plunging to a three-month low. Teck Resources TCKb.TO surged 4.3 percent to C$51.71.
 The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended down 72.23 points, or 0.53 percent, at 13,546.96. Earlier, it fell as low as 13,237.93, its weakest level since Jan. 25, and was down almost 8 percent from the 32-month highs it hit last week.
 The Toronto index has closed below its 50-day moving average around 13,700 for the past three days, paving the way for a retest of the December low around 13,100, said Fergal Smith, managing market strategist at Action Economics.
 MF Global’s Campeau said that after testing support near January’s low around 13,200, the next major level to watch will be the 200-day moving average around 12,600.
 Campeau said U.S. Federal Open Market Committee comments on Tuesday that the recovery is gaining traction didn’t play much of a role in the market’s bounce-back. [ID:nN15230117]
 “The Fed comments are a tad irrelevant in today’s volatility,” he said. “The Fed had maybe a 20- to 30-basis-point impact.”
 Uranium producers remained among the heaviest decliners on Tuesday, as were insurers and gold miners.
 Uranium One UUU.TO was off almost 14 percent at C$3.73, but top Canadian producer Cameco Corp (CCO.TO) made a stunning comeback to close up 1.2 percent at C$32.07 after falling more than 11 percent earlier in the day.
 “What happens is there’s a lot of hedge funds and people who get involved ... they drive it down and then when it gets down, they buy back in,” said John Kinsey, portfolio manager at Caldwell Securities.
 “Or you get people that come in, sort of bottom fishers or people who feel ‘well now we’ve got some value’,” he added, noting that countries like Japan, China and India are still going to build nuclear power plants and demand for uranium will remain.
 Barrick Gold Corp (ABX.TO) shed 2.4 percent to C$48.45, and Manulife Financial (MFC.TO), which has extensive operations in Japan, dropped 4.3 percent to C$16.02, deepening a three-day slide as the worsening crisis fueled fears that a prolonged slump on equity markets would hurt the insurer’s profits. [ID:nN15253225]
 Despite the Japanese tragedy -- with more than 10,000 people feared killed by the earthquake and tsunami -- Kinsey said some investors will see the disaster as an opportunity in anticipation of rebuilding efforts.
 ($1=$0.98 Canadian)  (Reporting by Claire Sibonney; editing by Rob Wilson and Peter Galloway)                                        

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