CANADA STOCKS-TSX dives on weak data, U.S. debt deadlock

Fri Jul 29, 2011 5:54pm EDT
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   * TSX falls 102.15 points, or 0.78 pct, to 12,945.63
 * Materials, financials, energy sectors all lower
 * Weak Canadian and U.S. economic data weighs
 * Drop in oil prices also helps to pull index lower
 (Adds details)
 TORONTO, July 29 (Reuters) - Toronto's main stock index
closed sharply lower on Friday, though off the one-month low it
hit earlier in the day, as weak economic data and the U.S. debt
crisis pushed investors to the safety of the sidelines.
 The materials sector posted the biggest drop, down 1.28
percent, followed by the financials group, which fell 0.93
 Royal Bank of Canada  (RY.TO: Quote) was the top heavyweight
decliner, down 1.3 percent at C$51.40. Next came fertilizer
producer Potash Corp (POT.TO: Quote), down 1.9 percent at C$55.16, and
miner Goldcorp (G.TO: Quote), which dropped 2.2 percent to C$45.69.
 The gold mining sub-group fell 1.3 percent, even as gold
prices rose to new highs on weak economic data and fears of a
U.S. default.
 "Gold stocks are stocks, and right now everybody is being
fairly cautious," said John R. Ing, President of Maison
Placements. "There's fear of a pullback, so people are saying
'let's wait for the pullback'."
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE ended the session down 102.15 points, or 0.78
percent, at 12,945.63, after falling to its lowest level since
June 27 earlier in the session. Eight of the 10 main index
sectors finished lower.   
 The index was down 4.1 percent for the week, and 2.7
percent for July.
 With most Canadian markets closed on Monday for various
provincial holidays, anxious investors moved to the sidelines
in advance of Tuesday's deadline for the United States to raise
its debt ceiling.
 U.S. President Barack Obama told deeply divided Republicans
and Democrats on Friday to stop bickering and find a way "out
of this mess". [ID:nN1E76S004]
"The Aug. 2 debt ceiling deadline is weighing," said John
Kinsey, portfolio manager at Caldwell Securities. "You don't
want to be short in case something good -- or bad -- happens
over the weekend."
 After market closed, Moody's ratings agency signalled that
a downgrade of U.S. credit would not come immediately, but
possibly in the medium term. [ID:nN1E76S1QO]
 Moody's also placed Spain's Aa2 credit rating on review for
possible downgrade, reviving fears of contagion in the euro
zone debt crisis.
 Weak economic data also weighed on equities. Canada's
economy unexpectedly shrank in May, with gross domestic product
falling 0.3 percent from a month earlier. It was the largest
drop since a matching decrease in May 2009.  [ID:nN1E76S093]
South of the border, GDP data showed the U.S. economy
stumbled badly in the first half of this year and came
dangerously close to contracting in the January-March period.
 Helping to offset losses, Bombardier (BBDb.TO: Quote) was up 2.12
percent at C$5.78 after Korean Air said on Thursday it would
buy 10 CS300 aircraft for $675 million. [ID:nS6E7IC008]
 Fairfax Financial (FFH.TO: Quote) rose 1.6 percent to C$376.00
after reporting a higher quarterly profit late on Thursday.
 Maple Leaf Foods (MFI.TO: Quote) was up 4.5 percent at C$11.49. On
Thursday the food processor said it had adopted a shareholder
rights plan and that its chief executive would acquire nearly a
third of its shares, prompting speculation a takeover attempt
could be in the works. [ID:nS6E7IC008]
 ($1=$0.95 Canadian)
 (Reporting by Trish Nixon; editing by Peter Galloway)