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TORONTO (Reuters) - Currency swings played a big role on Friday in knocking the TSX to its first lower close this week.
The Canadian dollar, pushed higher by unexpected strength in the jobs market, created discomfort for exporters, while a surge by the U.S. dollar put resource issues under pressure.
Heavyweight miners such as Barrick Gold Corp dropped 0.96 percent to C$41.25, while Goldcorp slid 0.78 percent to C$44.25 as the price of gold backed away from record highs hit earlier this week.
Potash Corp led all notable decliners, shedding 3.6 percent to C$94.44, after Dahlman Rose & Co initiated coverage of the fertilizer company with a "sell" rating. It gave rival Agrium a "buy" rating, but the stock moved lower with most of the materials group, falling 2.8 percent to C$53.93.
"A lot of today's action is driven by currencies," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver. "There is increasingly speculation that we may see rate hikes sooner rather than later in Canada."
The S&P/TSX composite index closed down 47.59 points, or 0.41 percent, at 11,436.92, ending the week up 4.4 percent. Eight of the index's 10 main groups were lower.
The consumer staples group was one sector that outperformed the broader market, partly because the jobs report showed a surprisingly drop in the unemployment rate. This could bode well for a stronger consumer backdrop in the lead-up to the all-important Christmas shopping season, analysts said.
"It's not a surprise on a day like this to see the consumer sector in Canada hold in a little bit better than industrials, finance, resources -- those sectors that are much more sensitive to overvaluation of the currency," said Andrew Pyle, wealth adviser and associate portfolio manager at ScotiaMcLeod.
U.S. Federal Reserve chairman Ben Bernanke said at a conference on Thursday he was thinking of an exit strategy from quantitative easing and low interest rates as the U.S. economy improves.
That sparked a broad rally by the U.S. dollar against major many currencies on Friday, but not against the Canadian dollar, which shot to a one-year high to nearly 96 U.S. cents because of the employment report.
The Canadian currency and recent data are seen testing the Bank of Canada's resolve to hold rates unchanged through mid-2010.
After four straight triple-digit gains for the TSX, the market may have been ripe for a retreat, particularly ahead of a holiday weekend in Canada.
The TSX will be closed on Monday for Thanksgiving.
Editing by Rob Wilson