November 15, 2012 / 10:04 PM / 6 years ago

CANADA STOCKS-TSX sinks to 3-month low on growth fears, Poseidon plunges

* TSX ends down 118.41 points, or 0.99 percent, to 11,811.38
    * Materials sector falls more than 2.0 percent
    * Poseidon Concepts down more than 60 percent

    By Claire Sibonney
    TORONTO, Nov 15 (Reuters) - Canadian shares tumbled to a
three-month low on Thursday, hit by global recession fears,
violence in the Middle East, and a massive drop in the stock
price of Poseidon Concepts Corp after the energy
services company cut its outlook.
    It was the fourth straight days of falls for Toronto's main
stock index, now down 1.2 percent since the start of the year.
    The materials sector, home to mining companies, dropped more
than 2.0 percent as commodity prices slid, with Goldcorp Inc
 down 3.3 percent at C$39.92 and Barrick Gold 
falling 2.1 percent to C$33.28. 
    Gold prices fell more than 1.0 percent to a one-week low as
data from the World Gold Council showed global demand
    "We've seen quite a flood of money leave the gold group, and
that's largely because earnings haven't been up to par in some
of the bigger names in the group," said Elvis Picardo,
strategist and vice president of research at Global Securities
in Vancouver.
    Picardo noted especially disappointing results from Barrick
and Iamgold Corp, down 1.4 percent to C$11.81.
    Financial markets have also been hit by worries fears about
budget negotiations in Washington, the failure of which could
trigger tax hikes and spending cuts that could push the U.S.
economy, the world's biggest, into recession.
     "The biggest issue for investors is still the 'fiscal
cliff' in the United States and the entrenched political
positions on both sides," said Julie Brough, vice president at
Morgan Meighen and Associates.
    "We're in a period of heightened uncertainty after what was
a quiet period when people lulled themselves into a complacent
    Adding to the selling pressure, data on Thursday showed the
United States reported a spike in new claims for jobless
benefits last week and also showed the euro zone slipped back
into recession in the third quarter, its second recession since
    The Toronto Stock Exchange's S&P/TSX composite index
 ended down 118.41 points, or 0.99 percent, at
11,811.38. Eight of the 10 sectors were weaker.
    Earlier in the session, the index fell to 11,761.34, its
lowest point since Aug. 7.
    "We're bouncing up and down like a yo-yo on a very long
string. This is a very long, emotion-fueled week for the
market," said Barry Schwartz, portfolio manager at Baskin
Financial Services. 
    Energy services company Poseidon Concepts Corp lost
more than 60 percent of its value and was one of the largest
drags on the Toronto market. Poseidon's shares fell to C$5.00
after it posted weak results and cut its outlook.
    The energy sector as a whole was down 0.6 percent as oil
prices fell in volatile trade as economic fears outweighed the
escalation of violence between Israel and Palestinians which
initially raised concerns about Middle East oil supplies. Two
rockets fired from the Gaza Strip targeted Tel Aviv on Thursday
in the first attack on Israel's commercial capital in 20 years.
    While there might be a potential spinoff benefit to the TSX
in terms of higher crude oil prices due to the conflict, the
overall risk aversion to be expected would probably not help the
TSX at all, some analysts said.
    The financial sector declined 0.8 percent as the
disappointing economic data dampened sentiment. Bank of Montreal
 fell 1.1 percent to C$57.08. Fairfax Financial Holdings
Ltd dropped 6.0 percent after touching a three-year low
after the stock was unexpectedly deleted from the MSCI Canada
    Research in Motion shares rose 3.4 percent to
C$8.80, a day after its chief executive expressed confidence
that a new line of BlackBerry 10 devices would offer long-term
value for unhappy shareholders.
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