CANADA STOCKS-TSX hits 2-week low on Fed worries; CP Rail dips

Tue Jun 4, 2013 4:54pm EDT
 
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* TSX falls 15.83 points, or 0.13 percent, at 12,593.97
    * Seven of 10 main sectors decline
    * CP Rail sheds 2.8 percent after activist investor move,
downgrade
    * Barrick declines after project delay, bullion price fall

    By John Tilak
    TORONTO, June 4 (Reuters) - Canada's main stock index fell
on Tuesday to a two-week low, hurt by declines in Canadian
Pacific Railway Ltd and Barrick Gold Corp as
well as concerns that the U.S. Federal Reserve might taper its
stimulus program.
    RBC Capital Markets cut its rating on CP Rail, a day after
activist investor Pershing Square Capital Management said it
would sell nearly one-third of its roughly 14 percent stake in
the company. CP shares tumbled 2.8 percent. 
    The market was further weakened as declines in the price of
bullion, which fell on concerns about demand in India, pulled
shares of gold producers lower. 
    But rising oil prices, fueled by rumors that South Korea
would create new incentives for refiners to import crude,
boosted energy companies and kept losses in check. 
    Speculation that the U.S. central bank might taper off its
bond buying is the single biggest source of market volatility,
said Elvis Picardo, strategist and vice president of research at
Global Securities in Vancouver.
     "The Fed is even now talking about taking the punch bowl
away," he added. "It's going to be quite a challenge for the
market to grapple with that."
    "We're seeing increased sensitivity to this sort of talk in
recent weeks, and we suspect that the volatility is going to
continue."
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 15.83 points, or 0.13 percent, at
12,593.97, falling earlier to 12,568.94, its lowest since May
17. 
    Canadian stocks have sharply underperformed their U.S. peers
so far this year.
    The sentiment for Canadian equities is "subdued," said Stan
Wong, vice president and portfolio manager at Macquarie Private
Wealth.
    "The story in Canada surrounds the fact that the housing
market is a little bit weaker and commodity prices are falling,"
he added. "And that's going to continue to spell trouble for the
TSX."
    Seven of the 10 main sectors on the Canadian benchmark index
were in the red on Tuesday.
    Financials, the index's most heavily weighted sector, fell
0.1 percent.
    The gold sector, down about 33 percent this year, shed 1.4
percent.
    Barrick Gold Corp lost 1.7 percent to trade at C$21.58, and
Goldcorp Inc fell 0.8 percent to C$30.42.
    Barrick said late on Monday it would delay the startup of
its Pascua-Lama gold mine in Chile and Argentina past late 2014
and that as a result, the project would probably exceed its
current budget of up to $8.5 billion. 
    Meanwhile, shares in Rogers Communications gave
back 0.7 percent to trade at C$46.45, a day after Canada's main
industry watchdog said that consumers will be able to cancel
their cellphone contracts after two years without penalty,
instead of the three years that is the current industry
standard. 
    In other company news, Canada blocked Telus Corp's 
application to assume struggling upstart Mobilicity's wireless
spectrum licenses. Telus shares were up 0.1 percent.
 
    But energy shares climbed 0.5 percent on higher crude oil
prices. Suncor Energy Inc, Canada's largest energy
company, gained 1.4 percent to C$31.78 and had the biggest
positive influence on the market.