July 27, 2011 / 9:09 PM / 6 years ago

CANADA STOCKS-TSX plunges to July low on U.S. debt deadlock

 * TSX down 267.89 points, or 2.01 percent, at 13,032.67
 * All 10 sectors weaker, led by materials, energy
 * RIM slides 5.7 pct after UBS share-price target cut  (Updates to close, adds analyst comment)
 By Trish Nixon
 TORONTO, July 27 (Reuters) - Toronto’s main stock index plunged more than 2 percent on Wednesday to its lowest point this month as weak U.S. data and a looming deadline for raising the U.S. debt ceiling sent investors searching for safety.
 With less than a week away before the U.S. could run out of cash to pay it’s bills, there was no sign of an end to the political deadlock in Washington. The cost of insuring U.S. government debt against a default within a year rose to a record high. [ID:nN1E76P2HJ]
 Further undermining investor confidence, U.S. data showed new orders for long-lasting U.S. manufactured goods fell unexpectedly in June, and a gauge of U.S. business spending plans slipped. [ID:nN1E76Q0BV]
 “The macro issues are the major driver,” said Fergal Smith, managing market strategist at Action Economics.
 “The market is keying off the U.S. budget gridlock, but also the weak U.S. data.”
 The materials and energy sectors weighed most heavily on the index, down 2.77 percent and 2.21 percent respectively, as global commodity prices fell. [O/R] [MET/L]
 Suncor Energy (SU.TO) was the biggest weight on the index, falling 2.7 percent to C$38.14, while Toronto-Dominion Bank (TD.TO) followed, down 2.1 percent at C$77.
 Research In Motion RIM.TO also dragged the index lower. Its shares fell 5.7 percent to C$24.37 after UBS cut its price target, saying the BlackBerry maker is still in the early stages of a software transition and is facing daunting competition. [nN1E76Q08E]
 The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended the day down 267.89 points, or 2.01 percent, at 13,032.67. All of its 10 main groups were weaker.
 “The loss has been very broad based,” Smith said. “Investors are trying to manage the risk profile against the current backdrop.”
 Helping to offset losses, shares of Sino-Forest TRE.TO jumped 8 percent to C$7.69 after a large Singapore-based fund increased its stake in the embattled Chinese forestry company to nearly 15 percent. [ID:nN1E76Q0DC]
 The stock was the most influential gainer on the index and the most heavily traded, with more than 12 million shares trading hands.
 Also helping support the market was Valeant Pharmaceuticals International (VRX.TO). It’s stock rose 0.5 percent percent to C$52.75 after reports that the Canadian company had made a takeover offer for Swedish drugmaker Meda AB MEDAa.ST  [ID:nL3E7IR1BE]
 ($1=$0.94 Canadian)  (Editing by Jeffrey Hodgson)                  

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