CANADA STOCKS-TSX drops as falling banks outweigh golds

Fri Aug 19, 2011 1:49pm EDT
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 *TSX down 73.14 points, or 0.6 percent, at 12,113.67
 *Banks down sharply, gold miners rally
 (Updates to afternoon)
 By Claire Sibonney and Trish Nixon
 TORONTO, Aug 19 (Reuters) - Toronto's main stock market
index swung lower in choppy trade on Friday, after a 3 percent
drop the previous day, as fears persisted that there will be
another U.S. recession, though a rally by miners helped cushion
the drop.
  Banks were among the most heavily weighted decliners, down
more than 1 percent. Toronto-Dominion Bank (TD.TO: Quote) slipped 3.2
percent to C$71.65, Bank of Nova Scotia (BNS.TO: Quote) shed 3.6
percent to C$50.58, and Royal Bank of Canada (RY.TO: Quote) lost 2.5
percent to C$49.21.
  "The market is clinging now to the hope that the (U.S.
Federal Reserve) would engage in additional policy steps with
(it) looking at Fed Chairman (Ben) Bernanke's speech at Jackson
Hole next week," said Fergal Smith, managing market strategist
at Action Economics.
  At 1:30 p.m. (1730 GMT), the Toronto Stock Exchange's
S&P/TSX composite index .GSPTSE was down 73.14 points, or 0.6
percent, at 12,113.67. Six of its 10 sectors were weaker.
 Smith said the break below the Aug. 16 low around 12,487
signaled a new downleg was underway, which may result in a
further drop to lows below 12,000 seen earlier in the month.
 Gold miners climbed nearly 2 percent as the price of
bullion hit a record high near $1,900 an ounce. [GOL/] Goldcorp
(G.TO: Quote) was the top heavyweight gainer, up 2.2 percent at
C$50.53, while Barrick Gold (ABX.TO: Quote) added 1.3 percent to
 "The trade is still defensive right now," said Francis
Campeau, broker at MF Global Canada in Montreal.
 "A lot of people that argue the way the yield curve has
been shifting, how corporate bonds are widening, there are many
indicators that are pricing in another recession in the U.S.,"
he said, adding that Europe's simmering financial crisis is
also weighing heavily.
  ($1=$0.99 Canadian)
 (Editing by Peter Galloway)