TSX falls as gold miners, defensive sectors decline

TORONTO (Reuters) - Canada’s main stock index fell on Monday as lower gold prices weighed on mining shares, while defensive sectors also declined, offsetting gains for financials as bond yields surged.

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014. REUTERS/Mark Blinch

The most influential movers on the index included gold companies. Barrick Gold Corp fell 3.4 percent to C$19.38 and Agnico Eagle Mines Ltd declined 3.5 percent to C$55.20.

Spot gold fell nearly 1 percent to a five-month low as the dollar and U.S. Treasury yields strengthened on expectations that U.S. President-elect Donald Trump will boost spending. [GOL/]

The materials group, which includes precious and base metals miners and fertilizer companies, lost 0.9 percent.

Defensive sectors, such as utilities, telecom and consumer staples, which have benefited from a low interest rate environment, also lost ground.

The consumer staples group fell 1.2 percent, with Alimentation Couche Tard Inc down 2.7 percent at C$61.70.

At 10:59 a.m. EDT, the Toronto Stock Exchange’s S&P/TSX composite index fell 27.03 points, or 0.19 percent, to 14,528.38.

Six of the index’s 10 main groups were lower.

Toronto-Dominion Bank rose 1.4 percent to C$62.51, while Manulife Financial Corp gained 3.0 percent to C$23.10 and the overall financials group was up 0.7 percent.

Gains for financials came as global bond yields surged, with investors betting that Trump will pursue policies that will trigger higher inflation.

Canada’s 10-year government bond yield touched its highest in 11 months at 1.591 percent. Just one and a half months ago it hit a record low at 0.904 percent.

Higher bond yields improve the net interest margin for banks and reduce the value of insurance companies’ liabilities.

Amaya Inc’s former chief executive, David Baazov, has offered to buy the Canadian online gambling company in a deal valued at about C$3.48 billion.

Its shares jumped 16.8 percent to C$21.42.

Gold Fields Ltd said late on Sunday that it had made three successive takeover proposals jointly with Silver Standard Resources Inc for Canadian miner Kirkland Lake Gold Inc, confirming a Reuters report on Friday..

Kirkland Lake’s shares rose 3.6 percent to C$8.33.

Energy stocks firmed 0.1 percent despite lower oil prices.

U.S. crude prices were down 1.7 percent at $42.69 a barrel as the prospect of another year of oversupply and weak prices overshadowed chances that OPEC will reach a deal to cut output. [O/R]

Reporting by Fergal Smith Editing by W Simon