TSX falls on commodity retreat, ekes out August gain

TORONTO (Reuters) - Canada’s main stock index fell on Wednesday as lower oil and gold prices weighed on energy companies and miners, while financial and other interest rate-sensitive stocks slipped as investors considered the likely path of U.S. interest rates.

A Bay Street sign, a symbol of Canada's economic markets and where main financial institutions are located, is seen in Toronto, May 1, 2013. Canada's main stock index fell more than 1 percent on Wednesday, hurt by sluggish economic data from China that hurt commodity prices and weak earnings reports from some of the country's biggest companies. REUTERS/Mark Blinch (CANADA - Tags: BUSINESS) - RTXZ6RE

The Toronto Stock Exchange’s S&P/TSX composite index fell 87.70 points, or 0.60 percent, to 14,597.15.

“Part of the reason for the drop is that some of the commodity-related names have run too far, too fast in Canada,” said Barry Schwartz, portfolio manager at Baskin Financial Services.

“Investors are looking for some kind of excuse to sell,” he said. “Investors have a heightened sense that possibly the markets are overvalued.”

The index eked out a 0.1 percent gain over the course of August but is trading just below a 13-month peak hit mid-month.

The energy group retreated 1.7 percent as oil prices fell 3 percent, while the materials group, which includes precious and base metals miners and fertilizer companies, lost 0.7 percent. [O/R]

Potash Corp gained 2 percent to C$23.76 and Agrium Inc rose 1 percent to C$126.36 a day after the two companies said they were in talks to merge into a fertilizer and farm retailing giant.

Barrick Gold Corp fell 2.3 percent to C$22.29, pressured by gold sliding to a two-month low after forecast-beating U.S. jobs data stoked speculation the Federal Reserve would move ahead with plans to raise interest rates. [GOL/]

Baskin’s Schwartz said uncertainty about when the Fed moves would likely hang over the market in the next month, and that real estate investment trusts and telecoms companies in Canada were being pressured by bets on U.S. hikes.

The financial sector slipped 0.5 percent on the day, while telecoms were off 0.6 percent. Seven of the index’s 10 main groups fell.

The most influential movers on the day included Suncor Energy Inc, which fell 2.4 percent to C$35.56

Restaurant Brands International gained 1.7 percent to C$62.57 after saying it planned to launch Tim Hortons coffee and doughnut stores in Britain.

Canada’s economy shrank in the second quarter in its worst showing in seven years, hurt by a drop in exports and a disruption to oil production caused by wildfires in northern Alberta, data from Statistics Canada showed.

Additional reporting by Fergal Smith; Editing by Nick Zieminski and Peter Cooney