CANADA STOCKS-TSX ends flat as rising miners offset weaker banks

Tue Nov 15, 2011 5:13pm EST
 
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 * TSX down 5.08 pts, or 0.04 pct, at 12,229.27
 * Italy, Spain yields trigger recession fears
 * Strong Canada, U.S. data help offset Europe worries
 (Adds details, analyst comments)
 By Jon Cook
 TORONTO, Nov 15 (Reuters) - Canadian stocks closed almost
unchanged in a volatile session on Tuesday as a late-day rally
by mining issues on some rare positive news from Europe offset
sagging financials.
 Toronto's heavily-weighted materials sector climbed 0.5
percent, as gold and base metal miners rebounded after Italy's
Prime Minister designate Mario Monti said he was close to
completing the process of forming a new government.
[ID:nL5E7MF0IL]
 "After their (European) market closed it seemed liked Italy
would be able to form a government and we got better news,"
said Kate Warne, Canadian market strategist at Edward Jones.
 Miners Tech Resources Ltd (TCKb.TO: Quote), up 2.4 percent to
C$38.90, and Ivanhoe Mines Ltd (IVN.TO: Quote), up 4.8 percent to
C$22.53, led the sector's gains.
 Investors were hopeful Monti could push through tough
European Union-mandated austerity measures that they hoped
would stabilize Europe's third-largest economy.
 Earlier in the session 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 initially 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 were the index's main drag, falling
0.5 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 laggard,
sliding 1.1 percent to C$45.40.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE closed up 5.08 points, or 0.04 percent, to 12,229.27.
The index was down for most of the session, touching a low of
12,147.86.
 Strong North American economic data also helped offset some
losses, as Canadian September factory sales hit their highest
level in more than three years and U.S. October retail sales
rose 0.5 percent, outpacing economists' expectations for a 0.3
percent gain. [ID:nSCLFME71G] [ID:nN1E7AE0A0]
 "If the economic news, particularly out of the U.S.,
suggests that the economy will continue forward even at a
sluggish pace but better than people were expecting, that's
good news for materials," said Warne.
 In company news, Avion Gold Corp AVR.TO shares fell more
than 12 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)