October 12, 2010 / 2:56 PM / 8 years ago

CANADA STOCKS-TSX slips as commodities under pressure

 *TSX down 10.34 points at 12,525.25
 *Five of 10 sectors weaker, financials up  (Updates with details, commentary)
 By Claire Sibonney
 TORONTO, Oct 12 (Reuters) - Toronto’s main stock index edged lower on Tuesday morning as a rebound in the U.S. dollar helped push down commodity prices, undermining the lift the index got from stronger financial shares.
 The index’s powerhouse energy sector lost 0.4 percent after oil prices slipped for a second day. Suncor Energy (SU.TO) fell 0.5 percent to C$34.87, and Canadian Natural Resources (CNQ.TO) lost 1.2 percent to C$37.50. [O/R]
 “Generally the commodities have been doing fairly well through last week,” said Aaron Fennell, senior market strategist and portfolio manager at commodity futures brokerage Lind-Waldock, a division of MF Global.
 “We’ve got crude oil up over $80 and really I don’t think that that is a sustainable price and I think a lot of other traders out there think that the commodity prices are not sustainable.”
 The greenback strengthened broadly against a basket of currencies on Tuesday after recent bullish momentum ahead of minutes from the U.S. Federal Reserve’s meeting that could provide fresh insight into the central bank’s thinking on further monetary easing. [FRX/]
 Also pressuring stocks and commodities, an official Chinese newspaper confirmed the nation’s central bank increased its required reserve ratio for six banks. [ID:nTOE69A05I] [ID:nTOE69A03Y]
 Gold and base-metal prices were softer, pushing the index’s materials sector down 0.2 percent. Goldcorp Inc (G.TO) was off 1.2 percent at C$44.01, and Teck Resources TCKb.TO dropped 2 percent to C$44.11. [GOL/] [MET/L]
 “Gold is obviously very popular right now but even gold is likely in a precarious position at $1,350 (an ounce),” Fennell said. “Stock traders are not looking at what prices are today, they’re looking at what prices will be a month from now, or two months from now.”
 He said copper also seemed overpriced, especially given that North America is not seeing a substantial economic recovery.
 “Even if they’re talking about quantitative easing, that can be bearish for commodities if (the Fed) ends up doing less quantitative easing than what the market originally thought,” Fennell said.
 At 10:27 a.m. (1427 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 10.34 points, or 0.1 percent, at 12,525.25. Five of its 10 main groups were weaker. Financial stocks were up 0.2 percent.
 Research In Motion RIM.TO fell almost 1 percent to C$49.50 after the Economic Times reported the BlackBerry maker was given a new deadline of Jan. 31 by the Indian government for a final solution to get access to all its services. [ID:nBMA008590]
 Potash Corp POT.TO rose 1.1 percent to C$149.18 after the Economic Times reported that China’s Sinochem has approached Indian state-run miner NMDC Ltd for a joint bid to buy the world’s largest fertilizer maker. [ID:nSGE69A035]
 Meanwhile Ontario Teachers’ Pension Plan is plotting a bid to spoil BHP Billiton’s $39 billion hostile offer for Potash, according to Britain’s Sunday Times. [ID:nSGE69903N]
 ($1=$1.01 Canadian)  (Editing by Peter Galloway)                                        

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