TORONTO (Reuters) - Toronto’s main stock index finished lower on Monday but managed to cut its losses toward the end of the session as resource shares regained ground and gold-mining issues rose.
A flare-up of concern over the euro zone debt crisis cast a pall over equities and other risky assets on Monday and that kept the Toronto Stock Exchange’s S&P/TSX composite index on a downward path that is now five sessions long.
“We did think the market was a little frothy last year so we’re not surprised to see a bit of a pullback here,” said Michael Sprung, president of Sprung & Co Investment Counsel.
“People managed to keep the rally going to the end of the year but now I would think they are taking some profits off the table. Our view all along has been that the market has been ahead of the underlying economic fundamentals.”
A Bank of Canada survey showed that companies were optimistic about the next 12 months, but many expect only modest growth, in part due to strong competition and moderate demand. Separately, a senior central bank official said low inflation and weak growth mean interest rates must remain low for now, while households must be wary of taking on too much debt.
The TSX index finished down 27.18 points, or 0.2 percent, at 13,245.12. Nine of its 10 main groups were lower, led by weakness in financials. The utilities group was flat.
Key decliners included Royal Bank of Canada, down 0.63 percent at C$51.69, and Toronto-Dominion Bank, down 0.67 percent at C$73.70.
Fears that Portugal would be forced into a bailout pulled the index down 1 percent earlier in the session, its lowest level in three weeks. A firm price for gold was a factor in the recovery as gold-mining issues were among the few blue chips that eked out gains.
Agnico Eagle pushed up 2.18 percent to C$71.32, while Goldcorp added 0.38 percent to C$42.66, helping the index’s materials group to limit its decline to 0.05 percent.
But diversified miner Teck Resources fell 2.34 percent to C$60.50 as the price of copper slipped for a fifth straight session, weighed down by news that China’s copper imports fell 2 percent in December.
The energy group recouped nearly all its losses as well, down 0.07 percent, partly on the rebound in Canadian Natural Resources shares. The stock was one of the 10 most active.
Canadian Natural recovered some of last week’s decline after it said it could resume limited production at its Horizon oil sands plant in northern Alberta after determining that key parts of its upgrader may still be able to function following a fire last week.
The stock, which fell 5.5 percent on Friday following the fire, rose 2.46 percent to C$41.60.
Although it has been a negative start for Toronto’s main index, a cautious but positive outlook on earnings could be the next catalyst.
Elvis Picardo, analyst and strategist at Global Securities in Vancouver, said the first quarter’s company guidance may set the tone and offer a glimpse of the year ahead.
“Investors are now waiting to see what earnings reports are going to start telling us. Expectations have been ratcheted higher,” he said.
Reporting by Ka Yan Ng; editing by Peter Galloway and Rob Wilson