CANADA STOCKS-TSX drops as China data sparks global pullback

Thu Oct 13, 2011 5:17pm EDT
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 * TSX drops 118.07 points, or 0.98 pct, to 11,911.89
 * Nine of 10 main index sectors lower
 * Investors retreat from equities and commodities
 (Adds comments and European context)
 By Ashleigh Patterson
 TORONTO, Oct 13 (Reuters) - Toronto's main stock index
closed nearly 1 percent lower on Thursday as cooling demand in
China and weak U.S. earnings spurred a retreat after two days
of strong gains.
 Financial shares in particular took a beating after
disappointing earnings from U.S. No. 2 bank JPMorgan Chase & Co
 The bank's quarterly profit dropped 25 percent,
underscoring how global market turmoil and euro zone debt
worries have hit investment bank revenues. On Wall Street, the
earnings sent the Dow Jones industrial average and the S&P 500
index lower after three days of strong gains.[ID:nN1E7951DK]
 In Toronto, Bank of Nova Scotia BNS.TO was off 1.92
percent at C$52.18. Royal Bank of Canada RY.TO slid 2.07
percent to C$47.82, while Manulife Financial MFC.TO sank 3.04
percent to C$12.46.
  "We seemed to be off somewhat because of the negative
reaction to JP Morgan bank earnings south of the border," said
Gavin Graham, president of Graham Investment Strategy, adding
the lack of confidence prompted risk aversion in Canadian
 "If we're seeing those bad numbers in U.S. banks, even
though Canadian banks are in a healthier position, we still saw
most of our banks off 1.5 percent."
 The Toronto Stock Exchange's S&P/TSX composite index closed
down 118.07 points, or 0.98 percent, at 11,911.89 .GSPTSE.
Nine of the index's 10 main sectors were down. The information
technology sector had a slight gain.
 The retreat came after the TSX hit a three-week high on
Wednesday, rising 1.3 percent after putting in a strong
performance on Tuesday.
 "We had a nice big rally and were due for a collective
pullback after it moved so much and we're off our lows on the
day, so it's a sign that maybe we are forming a bit of a base
here," said John Johnston, chief strategist at Davis-Rea.
 "In the grand scheme of things, there is some evidence that
we're rounding the bottom on the intermediate cycle, so we may
be setting up a nice run for the next three or four months. But
there is a lot of skittishness in the near term."
 Concerns over global economic momentum persisted as data on
Thursday showed China's trade surplus narrowed for a second
straight month in September, reflecting a cooling economy, with
both export and import growth rates easing. [ID:nL3E7LD191]
 Worries about a slowdown in the Asian powerhouse sparked a
global retreat from equities, oil and other commodities. China
is the world's second largest consumer of oil. [O/R]
 Suncor Energy SU.TO fell to C$29.14, down 1.59 percent
while Cenovus Energy CVE.TO fell 1.58 percent to C$34.26.
 The TSX's materials sector also suffered as risk aversion
drained copper market sentiment and sent bullion prices lower.
China is the world's largest copper consumer.[MET/L]
 Barrick Gold ABX.TO slid 2 percent to C$48, while
Goldcorp G.TO shares dropped 1.54 percent to C$47.90.
 In Europe, Slovakia ratified an agreement on Thursday to
expand the powers of the euro zone rescue fund. Slovakia was
the last of the 17 euro-zone members to approve the deal, but
its move did little to bolster confidence in a solution to
Europe's debt problems.
 "Some of the gloss is coming off. There has been some hope
that Europe was making progress, but there is not a lot
happening there," Johnston said.
 ($1=$1.02 Canadian)
 (Reporting by Ashleigh Patterson; editing by Peter Galloway)