CANADA STOCKS-TSX drops as China, Portugal spur growth fears

Wed Jul 3, 2013 11:25am EDT
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* TSX down 45.61 points, or 0.38 percent, at 12,132.71
    * Nine of 10 main index sectors decline
    * RBC drops, has biggest negative influence
    * Gold-mining shares rise with bullion

    By John Tilak
    TORONTO, July 3 (Reuters) - Canada's main stock index fell
on Wednesday as sluggish economic data out of China and a
resurgence of debt crisis fears in Portugal revived global
growth concerns and caused declines in most major sectors,
offsetting a jump in shares of gold miners.
    Data showed China's services sector expanded only modestly
in June with the vast construction industry acting as a drag on
growth, a further sign that the world's second-largest economy
is losing momentum. 
    Portuguese 10-year bond yields topped 8 percent and its
stock market dived after the country's president summoned main
political parties for crisis talks over the government's future.
The market fears a snap election could derail Lisbon's exit from
an international bailout. 
    While investors were clearly reacting to the news from
Portugal, the market is not expecting a full-blown European
crisis yet, said Shailesh Kshatriya, senior investment analyst
at the Canadian Strategy Group at Russell Investments Canada. 
    "The European situation at the margin is clearly not helping
the global growth story, but that's all priced in as far as the
market is concerned," he said.
    "If we see a true resurgence of the European crisis, where
we see Italian and Spanish bond yields reaccelerate to where
they were around May of last year, then there would be a lot
more concern," he added.
   The Toronto Stock Exchange's S&P/TSX composite index
 was down 45.61 points, or 0.38 percent, at 12,132.71.
   Canadian stocks have underperformed equities for months and
have dropped from their level at the start of the year.
    Kshatriya said he sees few major catalysts for a market
revival and plans to cut his 12,600 forecast for the TSX at
yearend. "It's a reflection of our cautious view of the earnings
story for Canada as well as the overall economic environment,"
he said.
    Nine of the 10 main sectors on the index were in the red on
    Financials, the index's most heavily weighted sector, were
down 0.7 percent. Royal Bank of Canada, the country's
biggest lender, fell 0.9 percent to C$60.40 and played the
biggest role of any single stock in leading the market lower.
Toronto-Dominion Bank lost 0.8 percent to C$84.11.
    Shares of telecommunications providers dropped 1.3 percent,
with Telus Corp falling 1.2 percent to C$32.29 and Rogers
Communications Inc down 1.7 percent at C$41.65.
    The materials sector, which includes mining stocks, was the
only major group to trade in positive territory, rising 1.1
percent. Shares of gold producers jumped 1.7 percent as the
price of bullion climbed. 
    Barrick Gold Corp added 1.4 percent to C$15.53, and
 Goldcorp Inc gained 3 percent to C$26.11.