* TSX down 11.84 pts, or 0.1 pct, to 12,212.35
* Italy, Spain yields trigger recession fears
* Financials drag broader index (Adds details, analyst’s comments)
By Jon Cook
TORONTO, Nov 15 (Reuters) - Toronto’s main stock index was weaker in a volatile session on Tuesday as soaring European bond yields offset strong U.S. retail sales and fears of another recession in Europe led financial stocks lower.
Italian and Spanish 10-year bond yields rose to levels considered unsustainable for their debt-riddled governments to be able to finance, putting pressure on the yield spreads of other European nations such as France, Germany, Holland and Austria. [MKTS/GLOB]
The euro zone turmoil caused a widespread market sell-off of financial stocks in favor of safe-haven U.S. and Canadian government bonds.
“The problem is about contagion, because everyone now agrees there’s going to be a recession in the euro zone countries,” said Gavin Graham, president at Graham Investment Strategy. “That obviously is going to have a knock-on effect on North American economies like Canada.”
Despite having little direct exposure to European debt, Canadian financial stocks led the broader index lower, falling 0.6 percent. Canadian banks have fallen on negative European news on fears a widening crisis would hit their profits.
Royal Bank of Canada (RY.TO) was the biggest drag, sliding 1.2 percent to C$45.33.
At 10:40 a.m. (1440 GMT) the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 11.84 points, or 0.1 percent, to 12,212.35. The index turned briefly positive, up 2.17 points, shortly after open.
Strong U.S. economic data helped offset some losses, as October retail sales rose 0.5 percent outpacing economists’ expectations for a 0.3 percent gain. [ID:nN1E7AE0A0]
In company news, Avion Gold Corp AVR.TO shares fell more than 11 percent after the Canadian gold miner cut its full-year production forecast for the second time in two months. [ID:nL3E7MF1LA] (Editing by Jeffrey Hodgson)