CANADA STOCKS-Soft data, commodity prices take TSX to 1-week low

Fri May 31, 2013 11:22am EDT
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* TSX falls 64.63 points, or 0.51 percent, to 12,681.92
    * Nine of 10 main sectors decline
    * Index on track for monthly gain
    * Rainy River soars after bid from New Gold
    * RBC slips, market's biggest negative influence

    By John Tilak
    TORONTO, May 31 (Reuters) - Canada's main stock index
slipped on Friday as lower commodity prices triggered a slump in
shares of natural resource companies and weak economic data out
of Europe and the United States dampened investor sentiment.
    While almost every major sector declined, the index still
looked on track for a gain in May, reversing losses in the
previous two months. 
    The commodities-exporting market, which has been hit sharply
this year by volatility in resource prices, reacts to global
economic trends because of its large exposure to materials and
energy stocks.
    Data showed that unemployment reached a new high in the euro
zone and inflation remained well below the European Central
Bank's target. U.S. consumer spending fell in April for the
first time in almost a year and inflation pressures were
subdued, pointing to a slowdown in economic activity.
     "You boil all this (the data) together and you get an
economic stew around the world that continues to be one of
positive growth, but certainly not as quick as most investors
would like or up to capacity," said Craig Fehr, Canadian market
strategist at Edward Jones in St. Louis, Missouri. 
     "The economy in the U.S. is clearly not firing on all
cylinders, but a lot more cylinders are firing today than they
have in the recent past."
    The Toronto Stock Exchange's S&P/TSX composite index
 was down 64.63 points, or 0.51 percent, at 12,681.92,
after falling as low as 12,658.22 earlier.
    The index is up about 2 percent this year, a rise that pales
in comparison to a 16 percent advance in the S&P 500.
    The growth prospects for the global economy look better in
the second half of the year than in the first half, Fehr said. 
    "As the global growth story starts to improve, Canada's
stock market and the economy should benefit from that," he
    Official data showed rising exports helped rouse the
Canadian economy from a sluggish second half of 2012 to grow at
an annualized rate of 2.5 percent in the first quarter, the
fastest pace in six quarters. 
    Nine of the 10 main sectors on the benchmark Canadian index
were in the red.
    The materials sector, which includes mining stocks, shed 0.8
percent. The prices of commodities such as gold and silver
    In company news, New Gold Inc agreed to acquire
gold exploration company Rainy River Resources Ltd for
about C$310 million ($301 million) to expand its asset base in
    New Gold shares fell 6.4 percent to C$7.17, but Rainy River
surged 36 percent to C$3.67.
    A drop in oil prices pulled energy shares lower. 
    Canadian Natural Resources Ltd slipped 1.7 percent
to C$31.40.
    Financials, the index's most heavily weighted sector, gave
back 0.5 percent.
    Royal Bank of Canada, the country's biggest bank,
lost 0.9 percent to C$62.28 and played the biggest role of any
single stock in leading the market lower.