TORONTO (Reuters) - Canada’s main stock index slipped to its lowest in nearly eight weeks on Thursday after strong economic data from the United States heightened concerns that the U.S. Federal Reserve might soon begin scaling back its bond buying program.
The market also was dragged lower by a 3.7 percent fall in the shares of Fortis Inc (FTS.TO) after the company agreed on Wednesday to acquire Arizona-focused utility UNS Energy Corp UNS.N for about $2.5 billion in cash.
A report showed U.S. retail sales rose in November as Americans bought automobiles and a range of other goods, contributing to the debate on the stimulus rollback.
Investors have been trying to figure out the implications of the economic data for the U.S. central bank’s next monetary policy move, and much of the market’s focus will be on a Fed policy meeting next week.
“The whole issue of Fed tapering has come back to haunt the market,” said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.
“The market seems to think that the Fed is closer to tapering than it has been in recent weeks. Until we have a resolution to this bond tapering, the markets are going to react in this confused manner.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 19.03 points, or 0.14 percent, at 13,114.39, after reaching 13,059.74, its weakest since October 18.
However, Picardo and other market strategists expect solid growth in the Canadian benchmark next year, a Reuters poll found, as the global economic recovery takes hold and boosts the shares of natural resource companies. <EPOLL/CA>
Six of the 10 main sectors in the index were in the red on Thursday.
In corporate news, miner Iamgold Corp (IMG.TO) said on Wednesday it has suspended its dividend payments until further notice. The stock fell 10.8 percent to C$3.63 on Thursday.
With the price of bullion tumbling 2.5 percent, the shares of gold mining companies also dropped. They reached their lowest point in about a decade earlier in the session.
Eldorado Gold (ELD.TO) shed 1.2 percent to C$5.95.
“A lot of the damage to the bullion has already been done,” said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates. “But we can’t say (gold stocks) have bottomed out as yet.”
Editing by Jan Paschal. Editing by Andre Grenon