CANADA STOCKS-TSX skids to 8-1/2 month low on U.S. woes

Tue Aug 2, 2011 5:15pm EDT
 
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 * TSX ends down 193.31 points at 12,752.32
 * Nine of 10 main sectors weaker, golds rally
 (Adds details, technical levels, comments)
 By Claire Sibonney
 TORONTO, Aug 2 (Reuters) - Toronto's main stock index hit
its lowest level since November on Tuesday after a U.S. deal to
avoid a government debt default failed to distract investors
from recent dismal economic data.
 Battered financial and energy shares, both down more than 2
percent, led the decline after a succession of bearish U.S.
data releases since last week sent investors fleeing to safer
havens, including gold, which surged to its ninth record high
this year.
 Suncor Energy (SU.TO: Quote) was the most heavily weighted
decliner on the index, down 3.7 percent at C$35.28, followed by
Bank of Nova Scotia (BNS.TO: Quote), off 3 percent at C$52.54.
 The retreat came on the heels of tepid U.S. and global
manufacturing data on Monday, when most Canadian markets were
closed for provincial holidays, and very disappointing U.S. GDP
figures last Friday.
  In economic data on Tuesday, U.S. consumer spending
dropped in June for the first time in nearly two years and
incomes barely rose, signs the economy lacked momentum as the
second quarter drew to a close. [nN1E7710A7]
 "The whole U.S. debt ceiling issue had transfixed the
markets, but unfortunately the focus is now turning to the lack
of strength in the U.S. economy," said Elvis Picardo,
strategist and vice president of research at Global Securities
in Vancouver.
 The United States stepped back from the brink of default on
Tuesday but congressional approval of a last-gasp
deficit-cutting plan did not dispel fears of a credit downgrade
and future feuds over taxes and spending. [nN1E77111G]
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE ended down 193.31 points, or 1.49 percent, at
12,752.32. Right before the close, the index hit its weakest
level since Nov. 18. Picardo said significant support around
12,500, a level not seen since last November, was now in play.
 Nine of the index's 10 main groups were lower with
gold-mining shares the one bright spot. Barrick Gold Corp
(ABX.TO: Quote) led the gainers, rising 2.4 percent to C$46.65.
 The next major data point to watch will be monthly U.S.
employment numbers on Friday.
 "We need an exceptional employment number to snap us out of
this funk," Picardo said. He noted, however, that even a mild
rise in the U.S. jobs numbers could have some positive impact
on markets.
 "The market is bracing itself for disappointment and if the
numbers come to be anything less than disastrous, it's quite
possible that we might get a rally."
 Looking to the rest of the summer, catalysts to drive
markets out of their recent slump may be few.
 "The biggest risk that you have is the summer slowdown can
accelerate in August," said Paul Hand, managing director at RBC
Capital Markets. "Whether it's the high yield market in the
U.S. or Europe taking August off."
 ($1=$0.96 Canadian)
 (Reporting by Claire Sibonney; editing by Peter Galloway)