TSX dips as lower gold prices pressure mining shares

TORONTO (Reuters) - Canada’s main stock index edged lower on Thursday as gold miners’ shares fell with the precious metal on increased expectations that U.S. interest rates will rise this year.

A sign board displaying Toronto Stock Exchange (TSX) stock information is seen in Toronto June 23, 2014. REUTERS/Mark Blinch

The materials group, which includes precious and base metal miners and fertilizer companies, lost 1.5 percent, while a global gold index heavily populated by Canadian miners dropped 2.5 percent.

Both measures had risen steadily this year until August and have faltered since.

Barrick Gold Corp fell 2.3 percent to C$20.59 and Detour Gold Corp lost 3.4 percent to C$22.87.

“Gold has had a very, very strong run and gold stocks more so, contributing a lot to the performance of the TSX year-to-date. So when you get a move like this ... it is going to have some impact,” said Philip Petursson, chief investment strategist at Manulife Investments.

Spot gold fell for the eighth straight session, down nearly 1 percent, pressured by a stronger dollar after U.S. weekly jobless claims fell and ahead of key data that could put the Federal Reserve on track to raise interest rates this year. [GOL/]

Fairfax Financial Holdings Ltd, which has bet on declining stock markets and more deflationary pressures, fell 3.5 percent to C$727.46.

The Toronto Stock Exchange’s S&P/TSX composite index closed down 15.08 points, or 0.1 percent, to 14,595.50.

Just four of the index’s 10 main groups ended lower.

Energy stocks firmed 0.4 percent as oil extended recent gains.

Cenovus Energy Inc rose nearly 3 percent to C$19.98 and Suncor Energy Inc advanced 0.6 percent to C$36.90.

“We continue to see some upside to oil prices and that will lift the TSX overall,” Petursson said.

U.S. crude oil futures settled up 61 cents at $50.44 a barrel spurred by an informal meeting of major oil producers on output cuts and plunging U.S. crude inventories. [O/R]

“What our research would show is that as oil prices move up it tends to lift TSX earnings across the board,” said Petursson.

In addition to energy companies, other groups that benefit from higher oil prices include banks, industrials and consumer companies, Petursson added.

Canada’s main stock index is expected to extend this year’s hefty gains in 2017, a Reuters poll found, although stock market strategists said they are concerned about the outcome of the U.S. election and potential threats to global trade. [EPOLL/CA]

Industrials rose 0.3 percent, while the heavyweight financials group was little changed.

Additional reporting by Alastair Sharp; Editing by Lisa Von Ahn and Diane Craft