CANADA STOCKS-TSX dives below 12,000 as rate fears bite

Fri Mar 19, 2010 12:13pm EDT
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* TSX down 89.19 points at 11,950.82

* Oil and gas and materials sectors lead index lower (Updates prices, adds details, quotes)

By Claire Sibonney

TORONTO, March 19 (Reuters) - Toronto's main stock index dived below the 12,000 mark on Friday morning as soft commodity prices hit petroleum and metals producers, and unexpectedly strong inflation data increased fears of higher interest rates.

Canadian Natural Resources (CNQ.TO: Quote), the country's biggest independent oil explorer, slid 0.96 percent to C$73.02, and natural gas major EnCana Corp (ECA.TO: Quote) dropped 2.3 percent to C$31.38.

Barrick Gold Corp (ABX.TO: Quote), the world's largest gold producer, was down 1.76 percent at C$39.61, and base-metals miner Teck Resources TCKb.TO fell 2.28 percent to C$40.32.

Commodity prices fell as renewed worries about Greece's debt problems pushed the U.S. dollar higher against the euro on safe-haven buying. Most commodities are priced in U.S. dollars. [O/R] [GOL/]

Meanwhile, stronger than expected Canadian inflation data increased expectations that the Bank of Canada will hike interest rates sooner rather than later this year. [ID:nN19500487]

"I think that markets are now realizing what the fixed income have realized for a while, and that is that in Canada interest rates are going to rise," said Carlos Leitao, chief economist at Laurentian Bank Securities, in Montreal.   Continued...