CANADA STOCKS-TSX hits near 2-month low on Europe debt fears

Fri Nov 25, 2011 5:29pm EST
 
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 * TSX down 23.26 pts, or 0.2 pct, at 11,462.06
 * TSX down more than 6 pct in November
 * Materials, energy groups lead index's losses
 * Hungarian, Belgian debt downgrades weigh on sentiment
 * Italian, German bond sales stoke fears
 (Adds analyst's comments, details) 
 By Jon Cook
 TORONTO, Nov 25 (Reuters) - Toronto's main stock index hit
a near two-month low on Friday as resource-related issues fell
after euro-zone debt downgrades and as another poor showing for
Italian and German bond sales sparked fears about the European
economy.
 A slew of bad news from Europe and light trading due to the
U.S. Thanksgiving holiday proved a bad combination for the
commodities-heavy index, which suffered its worst weekly fall
since early October, dropping more than 4 percent.
 "In essence, Canada is a warrant on growth because of its
50 percent (weighting) in energy and materials in the index,"
said Gavin Graham, president at Graham Investment Strategy. "If
you are worried about the outlook for growth, then that's going
to reduce demand for commodities."
 Oil and gas stocks led the index's losses, falling 0.7
percent as investor concerns that oil demand will be hurt by
Europe's spreading debt crisis pushed crude prices to their
second straight weekly loss. [O/R]
 Canadian Natural Resources (CNQ.TO: Quote) led the sector's fall,
dropping 2.3 percent to C$33.96. Suncor Energy (SU.TO: Quote) fell 2.1
percent to C$28.14.
 Gold and copper prices also fell, pulling down the index's
heavily weighted materials sector 0.1 percent. [GOL/] [MET/L]
Diversified miner Teck Resources Ltd (TCKb.TO: Quote) was a leading
decliner, down 2 percent at C$32.66.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE closed down 23.26 points, or 0.2 percent, at
11,462.06. It was the index's lowest close since Oct. 5.
 The TSX is down more than 6 percent since the beginning of
November, undermined by a parade of punishing news from
Europe.
 In another worrying bond sale on Friday, Italy was forced
to pay a record 6.5 percent for six months paper. That followed
a disastrous German bond auction earlier in the week and the
failure of the leaders of France, Germany and Italy to make
headway in tackling the debt crisis. [ID:nL5E7MP2B8]
 Also hurting investor sentiment were credit downgrades in
Belgium and Hungary. [ID:nN1E7AO0Y7] [ID:nL5E7MP0I9]
 "Things just keep getting worse in Europe," Graham said.
 The index's financial sector was down 0.3 percent. Royal
Bank of Canada (RY.TO: Quote) dropped 1.1 percent to C$43.40, while
Toronto Dominion Bank (TD.TO: Quote) fell 0.8 percent to C$68.18.
 With markets reeling, investors were hoping for strong U.S.
Thanksgiving weekend retail sales to reinforce signs of
strength in the U.S. economy. [ID:nN1E7AO004]
 "It's going to be fascinating to see what the consumer
spending numbers coming out of today are like," said Rick
Hutcheon, president and chief operating officer at RKH
Investments. "My suspicion is they're going to be better than
people expect."
 ($1=$1.05 Canadian)
 (Editing by Peter Galloway)