CANADA STOCKS-TSX slips as election uncertainty weighs

Tue Mar 22, 2011 5:53pm EDT
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   * TSX ends down 13.70 points or 0.1 pct, at 14,000
 * Four of TSX's 10 main groups lower
 * Energy stocks down 0.5 pct, materials off 0.4 pct
 * Federal budget may prompt TSX drop on Wednesday
 (Updates after budget, adds commentary)
 By Claire Sibonney
 TORONTO, March 22 (Reuters) - Toronto's main stock index
dipped on Tuesday, following a three-day rise, with the market
expected to see a further decline on Wednesday after Canada's
opposition parties said they would vote against the federal
budget, raising the likelihood of an election.
 A spring vote appeared all but inevitable after the market
closed as all three opposition parties said they could not
support the budget presented by the minority Conservative
government. [ID:nN22192715]
 The government promised to slice the federal deficit by a
quarter this year and return to surplus in 2015, while offering
a host of treats, widely seen as aimed at winning the support
of the New Democratic Party (NDP).
 "Like anything else, markets hate uncertainty," said Serge
Pepin, head of investments at BMO Investments.
 "We view this budget as having been a responsible budget
and ... hopefully investors will look at Canada on its merits.
I think that the Canadian equity market has proven itself time
and time again so we believe that if there is any type of
hiccup in performance that it would be somewhat short-lived."
 Commodity issues gave back some recent gains as many
traders kept to the sidelines amid political uncertainty
overseas and at home.
 The energy sector was down 0.5 percent after finishing up
1.61 percent on Monday, while the materials group, home to
mining companies, was down 0.4 percent -- despite higher prices
for oil and base metals.
 Canadian Natural Resources CNQ.TO slid 0.6 percent to
C$48.44, while Canadian Oil Sands COS.TO fell 1.7 percent to
 Fertilizer giant Potash Corp POT.TO was down 1.3 percent
at C$53.97 and Teck Resources TCKb.TO shed 1.5 percent to
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE ended down 13.70 points or 0.1 percent, at 14,000,
giving back some of Monday's 1.62 percent gain.
 Four of the TSX's 10 main groups were lower. Financial
stocks helped cushion the decline, rising 0.2 percent. Bank of
Nova Scotia BNS.TO was up 1 percent at C$59.21.
 Gold-mining shares were also firmer, rising 0.5 percent,
with Agnico Eagle AEM.TO up 0.6 percent at C$66.23.
 Events in Canada and overseas continued to weigh on market
sentiment and kept many investors playing wait-and-see.
 "Stock markets here and south of the border (were) actually
fairly quiet today," said John Kurgan, senior market strategist
at Lind-Waldock Canada. "Pretty much market makers on the floor
and investors in general just kind of sitting on their hands,
waiting," he added noting lighter than average volumes.
 Muammar Gaddafi's forces attacked two western Libyan towns,
killing dozens of people, while rebels were pinned down in the
east and NATO tried to resolve a dispute over who should lead
the coalition air campaign. [ID:nLDE72L00C]
 Meanwhile, Japan continued to battle a quake-crippled
nuclear plant as radiation fears grew. [ID:nL3E7EL23A]
 While Pepin expects the market's initial reaction to the
budget to be negative on Wednesday, he thinks international
events will eventually override domestic issues, and expects
stronger commodity prices will continue to support Canada's
resource-driven market.
 "There is still a chance for the parties to talk, so we're
all hoping that there is going to be some resolution to that,
however ... what's happening globally right now in the Middle
East, Northern Africa as well as still Japan, that's really
sort of taking a precedence over everything else at this
 ($1=$0.98 Canadian)
 (Additional reporting by Solarina Ho; editing by Rob Wilson)