TORONTO (Reuters) - Canada’s main stock index sank to a two-week low on Friday and notched its first weekly drop in eight weeks as doubts grew that Greece’s debt bailout deal would win final European approval.
The jitters sparked a drop in commodity prices and global equity markets. The Toronto index’s mining-heavy materials sector fell 1.2 percent as gold and base metals prices weakened. Among the miners, Teck Resources TCKb.TO fell 1.4 percent to C$40.24 and Barrick Gold (ABX.TO) dropped 1.3 percent to C$48.25. <GOL/> <MET/L>
Among oil and gas shares, Canadian Natural Resources (CNQ.TO) fell 1.4 percent to C$37.75 and Suncor Energy (SU.TO) was down 2.1 percent at C$33.87 as crude prices plunged on the renewed euro zone woes. Also pushing down the sector, the International Energy Agency cut its oil demand forecast for a sixth consecutive month due to a weak global economy.<O/R> The Toronto index’s energy sector fell 1.3 percent.
Combined, the materials and energy sectors make up around 40 percent of the TSX index.
Final approval of Thursday’s long-awaited Greek debt deal remained elusive, with fresh political wrangling injecting more uncertainty and keeping alive the risk of a debt default.
“The market is left hanging here with the sense that things could unravel,” said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services. “That’s really where we are. I don’t know if this is anything different today than it was yesterday or six months ago. But the market has decided to focus its energy on the negative stuff.”
He added that given the market’s strong start to the year, “it’s time to lock in some profits.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed 108.52 points, or 0.87 percent, lower at 12,389.42, with all 10 of its main sectors dropping. The index fell as low as 12,328.92 during the session, its weakest level since January 25.
For the week, the index shed 1.5 percent. It was its first weekly loss in eight weeks.
“Investors are getting whipsawed every which way whether the Greek bailout is on or off,” said John Ing, president of Maison Placements Canada. “To us, it’s all a sideshow because it’s just a prelude to ongoing sovereign debt problems that have yet to be resolved.”
Financial shares were down 0.4 percent, with Royal Bank of Canada (RY.TO) off half a percent at C$53.60 and Manulife Financial MFC.TO down 1.1 percent at C$11.75.
The Greek headlines overcame data that showed Canada’s trade surplus more than doubled in December from November.
In individual company news, shares of SNC-Lavalin Group Inc (SNC.TO) sank nearly 5 percent to C$50.90 after the company said it no longer employed two executives who had been linked by newspapers to the family of former Libyan dictator Muammar Gaddafi.
Schwartz characterized the sell-off as a “horrendous overreaction.”
“This is the type of the market we’re in where news stories dominant and take precedence over rationality,” he said of the sell-off in SNC-Lavalin shares.
Shares of Cameco (CCO.TO) fell 0.8 percent to C$23.17 after the uranium producer forecast lower sales and highlighted doubts about the take-up of nuclear power.
Among stocks bucking the broader market trend was Gildan Activewear (GIL.TO), which climbed 1.8 percent to C$24.30 after numerous analysts raised their price targets for the clothing maker. <RCH/CA>
Reporting By Jennifer Kwan; editing by Rob Wilson and Peter Galloway