June 4, 2010 / 8:45 PM / 9 years ago

CANADA STOCKS-TSX sinks on U.S. jobs data, Europe fears

* TSX slumps 242.26 points, or 2 pct, to 11,569.61

* All 10 sectors down sharply

* Canada jobs data wows, U.S. disappoints (Updates prices, adds details, quotes)

By Claire Sibonney

TORONTO, June 4 (Reuters) - Toronto’s main stock index tumbled 2 percent on Friday, following disappointing May jobs figures in the United States and worries that Hungary may be the latest casualty of Europe’s fiscal woes.

The soft U.S. employment report coupled with a Hungarian official warning of a “Greek-style” debt crisis also dragged on the euro, which fell below $1.20 for the first time in more than four years. [MKTS/GLOB]

Global stocks and other riskier assets such as commodities were knocked lower, hitting Canada’s resource-loaded index hard. [O/R] [MET/L]

Teck Resources TCKb.TO plunged 6.7 percent to C$32.77 and Suncor Energy (SU.TO) dropped 2.5 percent to C$32.46.

Financials were also beaten down, with Royal Bank of Canada (RY.TO) sliding 2.3 percent to C$53.54 and Bank of Nova Scotia (BNS.TO) sinking 3.8 percent lower to C$49.23.

“Investors don’t like the direction of the euro-dollar, they don’t like the job reports that came out and they just don’t like the general uncertainty in the market,” said Bruce Latimer, trader at Dundee Securities.

Hiring by U.S. private employers slowed sharply in May, a setback for the economy’s recovery in Canada’s biggest trading partner, even as temporary census hiring pushed overall U.S. payrolls growth to its fastest pace in 10 years. [ID:nN03243431]

“This puts a bit of dent into optimism that from here on in private sector job growth is going to be quite strong,” said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 242.26 points, or 2.05 percent, at 11,569.61 with all 10 of its main groups lower. The index was off 0.9 percent for the week.

“May wasn’t a good month and I think investors are just waiting for the market to sort itself and take itself down to a level where it wants to trade,” added Latimer.

In the near term, key technical levels to watch out for are 11,971 and 11,500.92, said Don Vialoux, a research analyst at JovInvestment Management.

The fact that the index has recently failed to puncture the 50-day moving average at 11,971 is “not a good sign,” he said.

“It implies the market’s sentiment is on the downside,” he added.

Global growth concerns overshadowed a rosier domestic employment report that showed Canada added almost double the number of jobs expected in May.

The impressive domestic data prompted analysts to predict the Bank of Canada would come under more pressure to raise interest rates again next month, despite the rocky global landscape. [ID:nN04118067]

“Canada saw strong growth in terms of employment but the U.S. is ten times our size and with Europe being pretty weak here people are looking for not only China but for the U.S. to continue economic growth,” said Nakamoto. (Additional reporting by Jennifer Kwan; editing by Rob Wilson)

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