June 8, 2010 / 5:48 PM / 9 years ago

CANADA STOCKS-TSX slips lower as Europe worries persist

* TSX down 12.13 points, or 0.1 percent, at 11,492.41

* Energy, financial sectors lead slide (Updates prices, adds details, quotes)

By Claire Sibonney

TORONTO, June 8 (Reuters) - Toronto’s main stock index struggled near the break-even mark on Tuesday afternoon, as risk aversion and worries over Europe’s fiscal health offset optimistic remarks from Federal Reserve Chairman Ben Bernanke on the state of the U.S. economy.

The biggest decliners included the economically sensitive financial sector, down 0.6 percent, while the energy sector was off 0.15 percent.

Shares of Royal Bank of Canada (RY.TO) slipped 0.2 percent to C$52.40, with EnCana Corp (ECA.TO) down 0.8 percent at C$34.46.

“It’s been another tough day ... I don’t think anyone expects the debt is going to be restricted to just Greece or Portugal,” said Michael Sprung, president of Sprung & Co. Investment Counsel.

“I think investors are beginning to turn their attention to the UK, which seems to be heading into the next problem ... and then eventually, we’ve got the U.S. to worry about.”

At 1:00 p.m. (1700 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 12.13 points, or 0.1 percent, at 11,492.41.

Materials rallied 1.1 percent as Barrick Gold Corp (ABX.TO), gained 1.6 percent to C$46.54, and Teck Resources TCKb.TO soared 4.3 percent to C$32.48.

The TSX index opened in positive territory, helped in part by rallying gold shares on the back of record high bullion prices above $1,250 as risk-averse investors looked to the precious metal as a safe-haven bet. [GOL/]

Earlier in the day, Fitch Ratings warned that Britain was facing a “formidable” challenge to cut its deficit and said the UK’s public debt ratio had climbed more quickly than that of other top-rated economies. [ID:nLDE6570YW]

Fergal Smith, managing market strategist at Action Economics, also pointed to the rise in euro zone government bond yields over benchmark German debt as a gauge of risk aversion. Rising spreads indicate weaker investor confidence.

“EMU (European Monetary Union) spreads remained fairly elevated. Greece’s 10-year spread has pushed back above 600 basis points so some of the major issues facing the market are still there,” he said.

Unlike U.S. indexes, which bounced higher at midday, the anxious Canadian market was apparently not as reassured by Bernanke’s comments late Monday that the U.S. economy seemed to have enough momentum to avoid a “double-dip” recession. [ID:nLDE65705B]

“I think what we’re seeing here is people battening down the hatches, taking profits where they can but we are in a market that is going to continue to be extremely volatile and reactive to releases,” added Sprung.

He said the market will be closely watching trade balance data for the United States and Canada, due Thursday.

In individual company news, shares of Maple Leaf Foods (MFI.TO) tumbled 3.3 percent to C$9.20, after a newspaper report said the Ontario Teachers’ Pension Plan was looking to sell its 35 percent stake in the food company. [ID:nN08245864]

$1=$1.05 Canadian Reporting by Claire Sibonney; editing by Rob Wilson

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