May 14, 2012 / 9:13 PM / 7 years ago

CANADA STOCKS-TSX breaches key level, hits 2012 low

* TSX ends down 206.14 pts, or 1.8 pct, at 11,488.53
    * Lowest close since Nov. 25, 2011
    * Materials, energy shares lead losses
    * Greek default fears weigh
    * China cuts bank reserves

    By Jon Cook	
    TORONTO, May 14 (Reuters) - Canada's resource-heavy main
stock index tumbled to a 2012 low on Monday with mining and
energy firms selling off as investors fretted about the impact
of worsening political turmoil in Greece and signs of weakening
Chinese growth.	
    Greece's anti-bailout, radical leftist SYRIZA party rejected
 a proposal by the country's president for the creation of a
government of technocrats to avoid a repeat election in a few
weeks, escalating worries Greece could leave the euro zone.
    The news sent Canadian stocks careening below 11,500 - a key
technical support level that was last breached in mid-December. 	
    "Breaking 11,500 is certainly a signal that the market is
vulnerable for another 250 points on the downside," said Ron
Meisels, president and chief technical analyst at Phases &
Cycles Inc.	
    All of Canada's 10 main sectors were in the red. The  
materials and energy groups both fell at least 3 percent as oil,
copper and gold sank to multi-month lows.   	
    Decliners included Goldcorp Inc, down 3.7 percent at
C$33.62, Potash Corp, down 1.8 percent to C$40.28,
Suncor Energy, down 2.6 percent to C$27.99, Canadian
Natural Resources, off 2.4 percent at C$30.25, and
Cenovus Energy, which dropped 2.6 percent to C$32.10.	
    The Toronto Stock Exchange's S&P/TSX composite index
 finished down 206.14 points, or 1.8 percent, at
11,488.53, its lowest close since November.	
    The index has fallen nearly 7 percent this month and market
watchers expect it could slide even further as conditions in
Europe unravel. 	
    "This massive risk aversion is hitting markets everywhere,
triggered by Europe and Greece," said Carlos Leitao, chief
economist at Laurentian Bank Securities.	
    Greece's troubles also helped drive up Spain's and Italy's
borrowing costs. 	
    Compounding the picture for investors was data that showed
output at factories in the euro zone unexpectedly fell in March,
the latest in a series of disappointing numbers signaling the
bloc's recession may not be as mild as policymakers hope.
    Signs of a struggling Chinese economy also chilled investor
sentiment. China, the world's second-biggest economy, cut bank
reserve requirements on Saturday to free up an estimated 400
billion yuan ($63.5 billion) for lending in a bid to avert a
sudden slowdown. 	
    Shares of fertilizer producer Agrium sank 3 percent
to C$81.05. Agrium was also impacted after the province of
Saskatchewan said on Friday it wants Ottawa to impose conditions
on Glencore's C$6.1 billion ($6.12 billion) takeover
bid for Viterra Inc. Glencore plans to sell parts of
Viterra, the country's top grain handler, based in Saskatchewan,
to Agrium. 	
    Silver Wheaton Corp's shares tumbled 7.4 percent to
C$24.48 after the world's largest silver stream company reported
a 20 percent increase in first quarter earnings on Monday, but
still failed to beat analysts' expectations. 	
    Also, miner First Quantum Minerals slid 5 percent to
C$17.35 after it was reported on Monday that the copper miner
had acquired a near 20 percent ownership stake in Zincore Metals
    Financial stocks sagged 1.1 percent as threats to Greece's
bailout package raised the likelihood of a default by the
debt-ravaged country. Although Canada's banking sector has far
less exposure to Greek and other euro zone debt holdings than
its global counterparts, it would still be caught in the
    Declines were led Royal Bank of Canada, down 1.4
percent to C$53.22, Bank of Nova Scotia, which fell 1
percent to C$52.50, and top insurer Manulife Financial,
off 2.9 percent at C$12. 	
    Looking ahead, Leitao said there was little data due this
week that could shake the market's negative momentum, which has
seen the TSX close lower in eight of its last nine sessions.
However, he said Canadian existing-home sales data due on
Tuesday had the potential to surprise to the upside.	
    "If we have another big number that goes along the same
direction as the housing starts of last week, that could feed
into the stronger employment numbers and may suggest that the
Canadian economy is still very strong."
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