June 28, 2012 / 4:14 PM / 7 years ago

CANADA STOCKS-TSX drops as EU summit worries grow, Tahoe sinks

* TSX down 62.50 points, or 0.55 pct, at 11,348.44.
    * Materials, financial issues lead market lower

    By Allison Martell
    TORONTO, June 28 (Reuters) - Canada's main stock index fell
sharply on Thursday as investors grew skeptical that a major
European Union summit would make progress on fixing the region's
debt crisis.
    The market was pulled down by financial issues and the
heavyweight materials group, which includes gold miners. The
price of gold dropped on pessimism about the summit, which runs
Thursday and Friday.  
    "There's only two things that matter right now, it's the
summit and soccer," said Pat McHugh, Canadian equity strategist
at Manulife Asset Management.
    "People are just getting very frustrated, you know the
policy stalemate, ping pong game, indecision, whatever word you
want to use, is really wearing people down."
    At about 11:30 a.m. (1530 GMT) the Toronto Stock Exchange's
S&P/TSX composite index was down 62.50 points, or 0.55
percent, at 11,348.44.
    Shares of Tahoe Resources Inc  fell 39.7
percent to C$9.75 before being halted on the Toronto exchange,
the biggest percentage decline of any company in the index.
    Tahoe tumbled even as it denied media reports that Guatemala
was considering legislation that would allow it to take up to 40
percent of companies exploiting natural resources there.
    Tahoe Resources is 40 percent owned by Goldcorp Inc,
which itself also owns the Marlin gold mine in Guatemala.
Goldcorp fell 3.5 percent to C$37.04 and played the single
biggest role of any stock in leading the market lower.
    Also in the materials group, Centerra Gold Inc fell
9.8 percent to C$8.91 after the Canadian miner said a
Kyrgyzstan-based independent member of its board had stepped
down. The news came one day after Kyrgyz lawmakers moved to
review Centerra's mining contract for its Kumtor gold mine.
    Among financial shares, major decliners included Royal Bank
of Canada, down 1.2 percent to C$50.77.
    Helping to offset losses, Progress Energy Resources Corp
 soared after Malaysia's state oil company agreed to buy
the Canadian company at a 77 percent premium to its Wednesday
close. The stock rose 73.7 percent to C$20.06 
    The fears about Europe overshadowed surveys suggesting a
more bullish long-term outlook for Toronto stocks.
    A Reuters poll showed that Canadian share prices are
expected to end 2012 slightly stronger, gaining in the next 12
months to erase year-to-date losses caused by the euro zone debt
    Separately, a survey by Russell Investments Canada found
that with worries about the European crisis pushing down
valuations, Canadian investment managers are increasingly
positive about Canadian equities. It found that 70 percent of
managers were bullish on the sector, compared with only 56
percent in the first quarter.
    In other company news, Empire Cos Ltd, parent of
grocery chain Sobeys Inc, posted higher quarterly profit and
boosted its dividend. The stock was little changed at C$54.01.
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