July 9, 2012 / 12:38 PM / 7 years ago

TSX falls on global growth fears

TORONTO (Reuters) - Canada’s main stock index fell on Monday, led by mining and energy shares, on doubts a meeting of euro zone ministers would accomplish much and after weak Chinese data stoked fears about global growth.

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE touched a July low during the session.

Weaker-than-expected Chinese inflation data, combined with a soft U.S. jobs report on Friday, raised concerns the global economy is hitting a soft patch. <MKTS/GLOB>

While markets slid, however, commodity prices rose on expectations that Beijing would act to avoid a hard landing of the world’s second-largest economy. Still, investors were cautious before a report due later in the week on China’s gross domestic product, which is likely to show the weakest expansion in three years.

“There’s a bit of a divergence that’s under way,” said Michael Gayed, chief investment strategist at Pension Partners LLC in New York. “That may be because of this feeling that what seems to be the aggressive policy steps that China is taking may start to cause a pick-up in demand for commodities.”

Most of Canada’s 10 main sectors were in the red on Monday. Leading the way were the materials and energy groups, which both fell 0.6 percent.

Teck Resources TCKb.TO was the biggest single drag, tumbling 2.6 percent to C$31.08 after the copper miner said on Monday it has temporarily withdrawn the environmental assessment application for its expansion at the Quebrada Blanca mine in Chile.

Other resource companies which fell included top gold producer Barrick Gold (ABX.TO), which slid 0.5 percent to C$37.36, First Quantum Minerals (FM.TO), down 2.8 percent at C$18.11, Suncor Energy (SU.TO), off 0.7 percent to C$29.16, and Canadian Natural Resources (CNQ.TO), which sank 1 percent to C$26.32.

The Toronto Stock Exchange’s S&P/TSX composite index finished down 25.29 points, or 0.2 percent, at 11,634.67. At one point it touched 11,565.04, its lowest since June 29.

Doubts that a meeting of euro zone finance chiefs will result in much progress further dented sentiment, while yields on benchmark Spanish and Italian bonds were moving up to levels considered unsustainable.

However, the losses were limited as the data was also seen boosting the prospects for stimulus from the world’s major central banks.

“That’s the sign of a bear market,” said John Ing, president of Maison Placements Canada. “The market is forever looking for the hope of a QE3, but the reality is that quantitative easing only buys time.”

Three top U.S. Federal Reserve policymakers on Monday laid the groundwork for a third round of bond purchases, or quantitative easing, to prop up the struggling economy.

With uncertainty high, investors bought up safe-haven telecommunications stocks, which edged up 0.2 percent. Telus Corp (T.TO) shares rose 0.7 percent to C$63.07, while BCE Inc (BCE.TO) climbed 0.4 percent to C$42.56.

Markets were also subdued ahead of the start of the U.S. earnings season.

With North American stocks being broadly oversold, Gayed said it could spark a turnaround.

“You could have a situation where the bad news and bad earnings and bad demand everyone is expecting ends up being seen as a reason to own risk assets,” he added. “If everyone already assumes that it’s negative then you start betting on the opposite.”

($1=$1.02 Canadian)

Editing by Kenneth Barry

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