TSX falls as gold miners, Potash Corp weigh

Tue Dec 29, 2009 4:45pm EST
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By John McCrank

TORONTO (Reuters) - Toronto's main stock index fell on Tuesday, led by a drop in the materials sector as shares of gold miners suffered from a slide in the price of bullion.

Potash Corp of Saskatchewan, the world's biggest producer of the fertilizer ingredient, also weighed on the sector, falling 2.2 percent to C$114.50 after the company announced a deep price cut for the commodity.

Goldcorp was the biggest heavyweight decliner of the day, down 3.7 percent at C$41.13. The company said toward the end of the session that it would match a rival's bid to acquire junior miner Canplats Resources.

Four other gold miners were in the top-ten decliners, with Barrick Gold dropping 2.3 percent to C$41.47 and Kinross down 3 percent at C$19.15. Yamana Gold fell 3.2 percent to C$11.97 and Agnico Eagle shed 2.4 percent to C$56.60.

Gold fell below $1,100 an ounce, snapping a three-day winning streak, as a rally in the U.S. dollar undercut the appeal of the precious metal as a hedge against inflation.

The weakness in gold and the strength in the greenback was in part due to economic data in the United States that showed a bigger-than-expected rise in consumer confidence in December, said Steve Ibel, an institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.

"It's probably also a bit of an anomaly today, based on the thin holiday trading. I think over the long term, you're going to see the price of gold go higher," he said, adding that the U.S. economy was not in the clear yet.

After a four-day pause in trading for the holidays, the S&P/TSX composite index ended down 52.80 points, or 0.45 percent, at 11,701.81. Seven of the index's 10 main sectors were lower, led by a 1.97 percent decline in the materials group.   Continued...

<p>A general view of the TSX (Toronto Stock Exchange) Broadcast Centre in Toronto in this June 20, 2008 file photo. REUTERS/Mark Blinch</p>