CANADA STOCKS-TSX edges lower as market mulls over Fed stance

Thu Sep 19, 2013 5:04pm EDT
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* TSX slides 4.62 points, or 0.04 percent, to 12,926.78
    * Index had touched a two-year high in early dealings
    * Six of the 10 main index sectors advance
    * Gold-mining shares decline despite bullion jump

    By John Tilak
    TORONTO, Sept 19 (Reuters) - Canada's main stock index
closed slightly lower on Thursday as a drop in resource shares
offset strength in utilities, telecoms and other high-yielding
groups, with investors catching their breath a day after the
U.S. Federal Reserve surprised markets by leaving its
stimulative bond-buying program intact.
    After a strong market rally in the previous session on the
Fed's decision, investors stepped back and tried to dissect the
U.S. central bank's comments on the economy and get a sense of
how long the Fed can wait before scaling back its stimulus
    The U.S. central bank said it would continue buying bonds at
an $85 billion monthly pace, citing strains in the U.S. economy
from a tight fiscal policy and higher mortgage rates.
    That spurred gold-mining shares on the Toronto market to
their biggest single-day percentage jump in about four years on
Wednesday, but on Thursday they gave back 3.2 percent despite a
4.4 percent jump in the price of bullion.
    The fall in golds helped the benchmark Canadian index ease
from the two-year high it touched in early trading.
    "After such a strong reaction to the Fed yesterday, it's not
surprising to see a little bit of a pullback," said Youssef
Zohny, portfolio manager at Stenner Investment Partners, a unit
of Richardson GMP.
    "The Fed has telegraphed it has less confidence in the
economy," he added. "That bodes well for the defensive and
income areas of the market, which seem to be repricing
    Zohny said volatility in commodity prices was weighing on
the Canadian market, but he sees them stabilizing over the long
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 4.62 points, or 0.04 percent, at
12,926.78, after rising as high as 12,964.86, its highest level
since August 2011.
    "It's normal for markets to have an initial, big flurry of
action and then take a bit of time to digest the news and
consider the ramifications," said Colin Cieszynski, senior
market analyst at CMC Markets Canada. 
    "For Canada, it's a case of we would've liked to have seen
the U.S. economy growing stronger," he added. "The stronger the
U.S. is, the better for us."
    Six of the 10 main sectors on the index were up.
    The telecoms group climbed 0.9 percent. In the group, Telus
Corp jumped 2.1 percent to C$34.58, and Rogers
Communications Inc advanced 1.2 percent to C$44.26. 
    Utilities gained 1.4 percent, and REITs added 0.6 percent.
    Financials, the index's most heavily weighted sector,
dropped 0.4 percent. Royal Bank of Canada, the country's
biggest lender, declined 0.1 percent to C$66.20. Manulife
Financial Corp, an insurer, lost 2.4 percent to
    The materials sector, which includes mining stocks, fell 1
percent. Goldcorp Inc stumbled 4 percent to C$28.02, and
Barrick Gold Corp was down 3.5 percent at C$19.94,
brushing aside the jump in the gold price.
    Goldcorp had the biggest negative influence on the index.
    "It suggests that people don't believe the (bullion) rally
yet," Cieszynski said. "The Street probably needs more
confirmation before they get too excited about the stocks."
    Shares of energy companies declined 0.3 percent, reflecting
a drop in the price of oil. In the group, Canadian Natural
Resources Ltd fell 0.8 percent to C$32.53.