TORONTO (Reuters) - Canadian stocks sank to a seven-month low on Tuesday as resource shares continued their May sell-off after Greece said it would hold new elections, heightening concern about its possible exit from the euro zone and the spillover effect on global markets.
Greece’s president said the country will hold new elections after politicians again failed to agree on a new government, sparking fears that left-wing politicians opposed to Greece’s international bailout terms could win the June elections.
The broad index fell more than 1 percent, with Canadian resource firms the hardest hit. Materials tumbled 3.4 percent, and energy shares slipped 1.8 percent. Gold miners paced losses, with many top producers falling in excess of 3 percent as bullion prices hit a four-month low. <GOL/>
“You’ve got a combination of profit taking with uncertainty and that makes for a bit of a pullback,” said Philip Petursson, managing director, portfolio advisory group at Manulife Asset Management.
Teck Resources TCKb.TO was off 4.1 percent at C$30.40.
On the energy side, losses were led by Canadian Natural Resources (CNQ.TO), which fell 2.7 percent to C$29.44 a day after the Alberta government charged the oil and gas producer with releasing poisonous hydrogen sulfide gas from its Horizon oil sands plant two years ago and failing to report the incident.
Suncor Energy (SU.TO), Canada’s largest oil producer, dropped 1.1 percent to C$27.67, as U.S. crude prices fell for a third straight session. <O/R>
“The flavor of the day is not to own resources, not to own risk stocks,” said Michael Simpson, senior portfolio manager at Sentry Select Capital Corp.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE finished down 145.48 points, or 1.3 percent, at 11,343.05. It touched a session low at 11,325.71, its lowest level since October 5.
It was the ninth time in the last 10 sessions that the index closed lower; the index has fallen 8 percent so far this month.
With earnings season nearly over and a dearth of major economic data to “move the needle” in a positive direction, Petursson said the market slide was likely to continue.
“There isn’t any reason to think that all of a sudden we’ll just turn around and shoot higher,” he added.
Financial shares slumped 0.5 percent on Tuesday on the latest bout of political instability in Greece and after Italian and Spanish 10-year yields hit 6 percent. <GVD/EUR>
“Greece at the moment appears ungovernable,” said Simpson.
While there was some good news from Germany, the euro zone’s largest economy, with data showing the economy grew 0.5 percent in the first quarter of 2012, it was largely offset by a survey of German analyst and investor sentiment that deteriorated sharply in May.
Helping counter the negative market tone was Canadian data that showed existing home sales edged up 0.8 percent in April from March and were up a strong 11.5 percent from a year earlier.
U.S. data on Tuesday was mixed, with weak retail sales in April offset by a better-than-expected increase in factory activity in New York state.
In individual company news, shares of Research in Motion RIM.TO fell 5.6 percent to C$11.18. A survey on Tuesday showed the BlackBerry maker’s market share dwindling as rival handset makers using Google’s (GOOG.O) Android smartphone software proliferate. After the market close, investor Greenlight Capital Inc disclosed it cut its stake in RIM by 45.3 percent to 1.6 million shares.
Editing by Leslie Adler