*TSX down 138.14 points, or 1.2 percent, at 11,797.94
*Nine of index’s 10 main groups fall
*Biovail continues to rally, up 13 percent (Adds details, quotes)
By Claire Sibonney
TORONTO, June 22 (Reuters) - Toronto’s resource-heavy main stock index tumbled on Tuesday, pushed lower by weaker commodity prices and a surprise drop in U.S. home sales.
Base-metal miners declined 3.2 percent as Teck Resources TCKb.TO shed 3 percent to C$35.57, and First Quantum Minerals (FM.TO) fell 3.1 percent to C$62.60.
The hefty drop in resource-linked shares followed a drop in oil and base metals prices as expectations grew that a slow rise in China’s yuan would have a more limited impact on demand than initially anticipated. [O/R] [MET/L]
“Softer prices are a natural sort of corollary to concerns about slowing global growth,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.
“China’s announcement caused some extremely short-term optimism and a flurry of buying but I guess investors reassessed the implications of that move.”
As well, U.S. data that showed existing home sales fell in May raised doubts about the pace of economic recovery. [ID:nN22382886]
“What’s happening is that evidence of a slowdown is increasing and that’s bothering investors because, as we know, the recovery is in a very fragile and tenuous state,” said John Ing, president of Maison Placements Canada.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 138.14 points, or 1.16 percent, at 11,797.94, with nine of its 10 main sectors weaker.
Healthcare shares gained 3.3 percent as drugmaker Biovail Corp BVF.TO rallied 13.1 percent to C$19.25.
The company said on Monday it would take over U.S-based Valeant Pharmaceuticals International (VRX.N) in a complex deal that the companies said would position them better to serve the growing baby boomer market. [ID:nSGE65K07S]
The U.S. Federal Reserve began a two-day meeting on Tuesday after which it is expected to restate its intention to keep interest rates on hold near zero for “an extended period” and perhaps offer a less upbeat outlook for the economy. [ID:nN22131836]
“Ahead of the decision, buyers are sitting on the sidelines and it’s quite likely that there is some profit-taking going on in the sectors that have done well over the past few weeks,” said Picardo, pointing to the energy and mining groups.
“There is a ton of concern out there about the impact that austerity measures from various countries may have on the broad markets, which is something that may be discussed in the upcoming G20 meeting.”
Leaders of the Group of 20 countries will meet in Toronto late this week.
Shares of Magna International MGa.TO climbed more than 2 percent to C$70.72. A majority of Magna shareholders have cast early votes in support of the auto-parts maker’s controversial plan to pay its founder a big premium to loosen his control, the Globe and Mail newspaper said on Tuesday. [ID:nN22114898]
$1=$1.03 Canadian Additional reporting by Jennifer Kwan; editing by Peter Galloway