May 19, 2010 / 8:54 PM / in 7 years

CANADA STOCKS-TSX tumbles as golds sag, German ban weighs

* TSX down 98.74 points, or 0.84 percent, at 11,665.77

* Gold issues lead broad decline

* Strength in banks helps to cut losses (Adds details, quotes)

By Jennifer Kwan

TORONTO, May 19 (Reuters) - Toronto's main stock index ended lower in a volatile session on Wednesday as gold miners tumbled on sliding bullion prices and investors worried over Germany's surprise crackdown on some speculative trading.

Gold miners were among the top movers to the downside as bullion prices skidded below $1,200 an ounce [GOL/].

Barrick Gold Corp (ABX.TO) ended down 3.6 percent at C$44.46 with Goldcorp (G.TO) lower by 4.3 percent at C$44.11. Kinross Gold (K.TO) shed 4.1 percent to C$18.05 and Agnico-Eagle Mines (AEM.TO) dropped 4.4 percent to C$61.90.

The TSX index was also dragged lower as investors fretted that Germany's ban on some riskier short-selling bets foreshadowed tighter financial regulation in other nations.

Germany banned "naked" short sales of euro-denominated government bonds, credit default swaps based on those bonds and shares of the country's 10 leading financial institutions, in a move that appeared to catch its partners in the European Union off guard. [ID:nSGE64I073]

In naked short-selling, a trader sells a financial instrument short, betting that it will fall, without first borrowing the instrument or ensuring that it can be borrowed, as would be done in conventional short-selling.

"Gold has sold off because people feel that Europe is less likely to see a mass exodus of money because of this ban on shorting," said Brendan Caldwell, president and chief executive of Caldwell Investment Management Ltd.

"The markets as a whole are selling off because of fears this heavy-handed regulation of free-market trading is likely to impact the markets in some as yet unmeasurable way. The markets really hate uncertainty," Caldwell said.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE finished the day down 98.74 points, or 0.84 percent, at 11,665.77, with eight of its 10 main sectors lower.

The index was briefly higher, but quickly dropped more than 2 percent to its lowest level since the market meltdown on May 6. The index has shed 4.3 percent in the past week.

Additional pressure on Wednesday came on the back of an unexpected fall in April U.S. consumer prices, the first decline in a year. [ID:nN19229663]

"If you have weaker prices year-over-year, basically what it points to is there's not as much consumer spending out there as you would like," said Steve Ibel, institutional equities trader at Beacon Securities in Halifax, Nova Scotia.

The energy group shed 0.2 percent with Husky Energy (HSE.TO) down 1.6 percent at C$26.25.

On the upside, financials climbed 0.2 percent and health care issues were up 0.3 percent.

The heavyweight group managed to limit losses ahead of earnings results next week and because the sector's big banks are seen as comparatively safe, analysts say.

Royal Bank of Canada (RY.TO), the country's biggest bank, was up 0.7 percent to C$60.53, while Canadian Imperial Bank of Commerce (CM.TO) rose 2.7 percent to C$74.25.

Toronto-Dominion Bank (TD.TO) was up 0.6 percent at C$72.53 and Bank of Montreal (BMO.TO) gained 0.6 percent to C$60.96.

In individual company news, FNX Mining FNX.TO and Quadra Mining QUA.TO shareholders approved Quadra's takeover of FNX on Wednesday, a deal that will combine FNX's underground copper and nickel mines in Canada with Quadra's far-flung open-pit assets. [ID:nN19230835] FNX stock was up 3.1 percent at C$10.46 while Quadra shares rose 3.7 percent to C$12.08.

Canaccord Financial (CF.TO) sank 3.4 percent to C$9.12 as it reported quarterly core earnings that more than tripled, though expenses also rose sharply after the investment dealer's recent takeover of Genuity Capital Markets. [ID:nN19200313]

The blue chip S&P/TSX 60 index .TSE60 closed 4.79 points lower, or 0.69 percent, at 689.19.

$1=$1.04 Canadian Reporting by Jennifer Kwan; editing by Rob Wilson

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