TORONTO (Reuters) - Stocks finished lower on Monday, led by financial and mining shares, as events in Spain threatened to escalate Europe’s debt crisis, but a $15.1-billion takeover bid for Nexen Inc NXY.TO boosted energy stocks and helped the index avoid bigger losses.
For the second straight session, fears about Spain rattled equities markets. Spanish media reported on Monday that up to six regions may seek aid from the central government after Valencia asked for funds on Friday, sending the yield on Spanish 10-year debt to a euro-era high of over 7.5 percent.
“There’s a degree of fatigue with this whole Europe situation which has been weighing on equity markets for months,” said Elvis Picardo, strategist at Global Securities in Vancouver.
Nine of Canada’s 10 main sectors fell on Monday. Declines were led by the powerhouse financial services group, which dropped 1.6 percent as investors worried about what a broader Spanish bailout would mean for the global financial system.
Losses were sharpest among the country’s largest banks, with Royal Bank of Canada RY.TO falling 1.7 percent to C$51.52, Bank of Nova Scotia BNS.TO down 1.5 percent at C$51.39, and Toronto-Dominion Bank TD.TO dropped 1.2 percent to C$79.05.
Mining stocks also fell sharply, with the heavily weighted materials sector sliding 2 percent as euro zone concerns weighed on the outlook for demand for base metals and gold. <MET/L> <GOL/>
“When it looks as though there will be less demand simply because of falling economic expansion, then I can understand why the prices would be down in the manner in which they are,” said Fred Ketchen, director of equity trading at ScotiaMcLeod.
Among the biggest decliners were Barrick Gold ABX.TO, which fell 2.3 percent to C$34.13; Goldcorp G.TO, down 1.7 percent at C$33.47; Teck Resources TCKb.TO, off 2.6 percent at C$29.80; and First Quantum Minerals FM.TO, which tumbled 4 percent to C$17.23.
Risk assets were also pressured by concerns over Greece’s future within the euro zone, which surfaced ahead of a visit to Athens by a group of international lenders on Tuesday.
The International Monetary Fund on Monday dismissed a weekend news report that it may refuse to continue supporting Greece as it prepares for talks with the new Greek government on its international bailout.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 77.37 points, or 0.7 percent, at 11,545.54. The index rallied after hitting 11,416.49, its lowest since July 12.
Despite a big drop in oil prices on Monday, Canada’s energy sector remained in positive territory, up 2.3 percent, on the strength of a couple of prominent acquisitions of Canadian oil and gas firms by Chinese energy giants.
Nexen’s shares surged more than 50 percent to close at C$26.35 after China’s state-owned oil company CNOOC 0883.HK announced it plans to buy the Canadian rival for $15.1 billion - China’s richest foreign takeover bid yet. CNOOC said it would pay $27.50 cash per share, a 61 percent premium to Nexen’s closing price in New York on Friday NXY.N.
The deal was quickly followed by another Chinese move on Canadian-owned oil assets, as Sinopec Corp 600028.SS said it would buy 49 percent of Talisman Energy’s TLM.TO British unit for $1.5 billion. Shares of Talisman, Canada’s No. 6 oil and gas exploration company, jumped nearly 7 percent to C$11.80.
“That’s two big Canadian majors that have attracted significant overseas buyers in the space of a day,” said Picardo. “That bodes well in terms of at least putting a floor below Canadian energy stocks for the next little while.”
Other oil and gas firms catching bids, included: Encana Corp ECA.TO, up 3.7 percent to C$21.53; Cenovus Energy CVE.TO, which rose 2.2 percent to C$33.25; and Meg Energy Corp MEG.TO, which climbed 2.7 percent to C$39.51.
In other news, Research In Motion Ltd RIM.TO was up 1.5 percent to C$6.97 after a regulatory filing showed Canadian investor Prem Watsa has become the embattled BlackBerry maker’s largest known shareholder, nearly doubling his stake to nearly 10 percent. Watsa is the chief executive of insurer and investment company Fairfax Financial Holdings Ltd FFH.TO and a RIM board member since January.
Reporting by Jon Cook; Editing by Leslie Gevirtz and Leslie Adler