October 23, 2012 / 9:18 PM / 6 years ago

CANADA STOCKS-TSX sheds 1.4 pct, troubled by gloomy outlook

* TSX drops as much as 2.12 percent
    * Down 1.43 percent, or 177.70 points, at 12,225.84
    * Energy down 1.97 pct, materials off 2.09 pct, financials
fall 1.3 pct
    * RBC, Suncor, CNQ most influential decliners

    By Solarina Ho and John Tilak
    TORONTO, Oct 23 (Reuters) - Canada's main stock index
tumbled as much as 2 percent on Tuesday as bearish U.S.
corporate forecasts and a credit downgrade of five Spanish
regions sent resource and financial stocks sharply lower and
revived distress over the global economy.
    Energy stocks, which had been hit hard on Monday, fell 1.97
percent. Suncor Energy, one of the most heavily weighted
decliners, dropped 2.16 percent to C$32.66. Canadian Natural
Resources fell 3.7 percent to C$29.64.
    Financial stocks, led by the Royal Bank of Canada,
fell 1.3 percent, in sympathy with U.S. bank stocks.
    "The market is very skittish ... fear of what's going on
worldwide," said Irwin Michael, portfolio manager at ABC Funds.
    "We all know the economy appears to be scratching bottom,
and slowly but surely moving up, but people are concerned about
earnings per share."
    Soft earnings outlooks from major U.S. companies like DuPont
, 3M <MMM.N and United Technologies fueled worries
over the economic health the United States, Canada's largest
trading partner.   
    Sixty-three percent of the S&P 500 companies that
have reported quarterly results so far have missed analysts'
expectations for revenue. By contrast, since 1994 an average of
62 percent of companies have exceeded estimates. Over the past
four quarters, 55 percent of companies have beaten. 
    "It's a pretty ugly day. Just about everything that could go
wrong is going wrong," said John Kinsey, portfolio manager at
Caldwell Securities Ltd.
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 1.43 percent, or 177.70 points, at
12,225.84. It had fallen as much as 2.12 percent to 12,141.19
earlier in the day.
    ABC Funds' Michael said the market was due for some
    "I'm not sure where it bottoms, but eventually ... it will
work its way up toward year end. We expect the market to close
higher than where it is today by year end," he said.
    All 10 of the TSX index's 10 main groups were negative, with
half down 1 percent or more. Volumes were not hefty, however, as
uncertainty kept investors side-lined.
    "It doesn't take very much to move a stock up or down,"
Michael said.

    Lower oil prices weighed on energy shares as investors
focused on the fragile world economy and its impact on demand
for oil, copper and other commodities. 
    The sector extended losses from Monday after Canada's
decision over the weekend to block Malaysian state oil firm
Petronas's C$5.17 billion ($5.21 billion) bid for Progress
Energy Resources Corp. The surprising outcome raised
concerns the government might also veto state-owned Chinese
company CNOOC's C$15.1 billion takeover bid for oil producer
Nexen Inc.
    The Toronto index's resource sectors also tracked bullion
and copper prices, which both hit six-week lows.  
    The index's materials group, home to miners, slid 2.09
percent. Goldcorp Inc was down 2.6 percent at C$42.25.
    Weakness in U.S. bank shares has spilled over to Canadian
banks, said Kinsey, noting that Canadian bank stocks "were due
for a correction. Maybe this is it."
    Royal Bank of Canada, which said on Tuesday it agreed to buy
the Canadian auto finance and deposit business of Ally Financial
for $4.1 billion, dropped 1.83 percent to C$56.94.
    Toronto-Dominion Bank was down 1 percent at C$82.09.
The bank agreed to buy Target Corp's credit card
    The financial, energy and materials groups make up roughly
75 percent of the index.
    Canadian National Railway was down 0.9 percent, at
C$86.29. The rail operator posted a modest increase in quarterly
profit on Monday as revenues climbed for all its business
segments, and affirmed its full-year forecast despite its
caution over the economy. 
    Tourmaline Oil was one of the few gainers, finishing the
session up 2.87 percent at C$32.61. The company, on which one
analyst raised the price target, said it will buy privately held
oil and gas producer Huron Energy Corp in an all-share deal
valued at about C$258 million ($259.7 million) to expand its
presence in the Montney shale region in British
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