TORONTO (Reuters) - Canada’s main stock index slipped to a two-month low on Tuesday, dragged down by resource and financial shares as investors dwelled on fears of a fiscal crisis in the United States and more debt turmoil in Europe.
Concern over whether U.S. politicians would be able to reach a deal to tackle the “fiscal cliff” of spending cuts and tax increases that threatens to push the economy into recession continued to dampen sentiment, as did a new controversy over Greece’s debt crisis. <MKTS/GLOB>
“The main thing hanging over the market right now is the fear of what’s happening in the macroeconomy, whether it’s Europe or the fiscal cliff in the United States or slower activity in China,” said Michael Sprung, president of Sprung Investment Management.
“All this feeds into the Canadian market through worries about what’s going to happen to energy prices or commodity prices.”
Oil prices fell for a second day in a row on concerns about lower demand. <O/R>
Suncor Energy (SU.TO) was the biggest contributor to the index’s decline, falling 2.5 percent to C$32.55. The energy sector, one of the biggest on the index, was down 0.7 percent.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended down 56.80 points, or 0.47 percent, at 12,134.66. Earlier in the session it fell as low as 12,124.35, its weakest level since September 6.
The materials sector, which includes mining stocks, fell 0.9 percent, hurt by falling commodity prices.
“The falling commodity prices are more than offsetting the increase in production we’re seeing across the resource sector. They are having a very large impact on stock prices,” said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, Missouri.
“By and large, the markets are going to be in a wait-and-see mode as we progress towards the end of the year,” he said.
Some financial stocks declined, with Toronto-Dominion Bank (TD.TO) falling 0.4 percent to C$80.36, and Manulife Financial Corp (MFC.TO) down 1.2 percent at C$12.15. The index’s financial sector was down 0.3 percent.
Shares of Shoppers Drug Mart Corp SC.TO jumped 3.3 percent to C$42.46 after the pharmacy chain reported higher quarterly sales.
Quebecor Inc (QBRa.TO) (QBRb.TO) gained 1.8 percent to C$35.90 after the Canadian media and telecommunications conglomerate said it was cutting 500 jobs in its Sun Media unit as the business struggles with declining advertising revenue and weak circulation.
Canadian department store chain Sears Canada SCC.TO lost 5.7 percent to C$11.76 after reporting a quarterly loss on lower sales.
Of the 73 percent of TSX companies that have reported third quarter results so far, 48 percent have met or beat expectations while 52 percent have missed, according to Thomson Reuters StarMine data.
Additional reporting by Claire Sibonney; Editing by Peter Galloway