CANADA STOCKS-TSX falls as euro zone fears hit miners, banks

Wed Nov 16, 2011 5:27pm EST
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 * TSX drops 54.91 pts, or 0.5 pct, to 12,174.36
 * Europe debt contagion fears weigh
 * Gold miners drag on lower bullion prices
 * Energy sector gains as oil rises above $100
 (Adds details, analyst's comments)
 By Jon Cook
 TORONTO, Nov 16 (Reuters) - Toronto's main stock market
index closed lower on Wednesday as a new wave of fears about
Europe's debt crisis hurt miners and banking shares, offsetting
gains in the oil and gas sector.
 Anxiety over Europe washed over markets again as the
European Central Bank's buying of Italian and Spanish bonds
failed to stem a broad euro-zone bond selloff. In France, yield
premiums on the 10-year government bond over German bunds hit
euro-era highs. [ID:nL5E7MG0ZG]
 A Fitch Ratings report said U.S. banks could be greatly
affected if "contagion continues to spread beyond the stressed
European markets." [ID:nMNS4bnfXx]
 "It's fair to say that deeper debt contagion would have a
large impact on the broader global financial system and U.S.
banks would not escape the trouble unscathed," said Gareth
Watson, vice president of investment management and research at
Richardson GMP Ltd.
 Gold-mining stocks fell 1.4 percent as the euro-zone
jitters pushed bullion to its biggest one-day drop this month.
 Barrick Gold (ABX.TO: Quote) was the biggest drag, falling 1.5
percent to C$52.65. Minefinders Corp's MFL.TO shares plunged
more than 10 percent to C$12.46 after downgrades.
 Bucking the gold miners' downward trend, shares of Novagold
(NG.TO: Quote) rose 24 percent to C$11.13 after the company said it is
exploring a possible sale of its 50 percent stake in the big
Galore Creek copper/gold project in northwestern British
Columbia. [ID:nN1E7AF0JS]
 Though widely viewed as a safe-haven, gold has recently
traded in line with headlines from Europe and was down with
fears the European debt crisis is broadening and could engulf
the economies of Austria, the Netherlands and France.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE closed down 54.91 points, or 0.5 percent, at
 Eight of the index's 10 main sectors were negative, with
gold-mining stocks leading the heavily weighted materials group
to a 1.5 percent drop.
 The financial sector fell 0.4 percent. Toronto-Dominion
Bank (TD.TO: Quote) led the losses, falling 1 percent to C$71.73.
 The TSX spent most of the day in positive territory, led by
surging U.S. oil, which rose to $101.52, its highest level
since June. [O/R]
 The move in oil was supported in part by some unexpectedly
strong U.S. economic data and by Enbridge Inc's  (ENB.TO: Quote) plan
to reverse the Seaway pipeline by next year to help ease an oil
glut at the Cushing, Oklahoma, delivery hub. [ID:nL5E7MG28R]
 Oil's surge helped the index's energy sector, pummeled for
most of the year, rise nearly 1 percent. Canadian Natural
Resources (CNQ.TO: Quote) led the group's gains, jumping 3.2 percent
to C$38.69.
 "If this world is so concerned about global growth
prospects it's very shocking that you have oil above $100 a
barrel," Watson said.
 "We've already seen at the beginning of this year and back
in 2008 that higher oil prices do not help grow the economy and
in fact it causes a contraction and downward performance in the
overall market," he added.
 TransCanada Corp (TRP.TO: Quote) shares climbed 0.3 percent to
C$40.90 after the energy infrastructure company said it could
start building the southern portion of the Keystone XL pipeline
even as it awaits U.S. approval for the project as a whole.
 Enbridge stock rose 0.3 percent to C$34.91 after purchasing
ConocoPhillips stake in the 350,000 barrel per day Seaway
pipeline for $1.15 billion, and saying it will reverse the
line's flow. [ID:nN1E7AF0BQ]
 The telecommunications sector, a traditional safe haven,
was down nearly 1 percent, a day after Canada's communications
regulator allowed big Internet service providers to charge
lease fees based on the amount of capacity small providers use.
 In other company news, Research In Motion's RIM.TO shares
were up more than 0.8 percent at $19.69 after Goldman Sachs
raised its rating on the BlackBerry maker.
 ($1=$1.02 Canadian)
 (Editing by Jeffrey Hodgson and Peter Galloway)