CANADA STOCKS-TSX down as financials slump on Europe debt fears

Tue Nov 15, 2011 11:05am EST
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 * 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: Quote) 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.
 (Editing by Jeffrey Hodgson)