CANADA STOCKS-Bottom feeders save TSX from steeper selloff

Tue Mar 15, 2011 5:21pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

   * 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: Quote) was off 0.45 percent at C$41.90, but
Canadian Natural Resources (CNQ.TO: Quote) 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: Quote) 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: Quote) shed 2.4 percent to C$48.45, and
Manulife Financial (MFC.TO: Quote), 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)