* TSX up 0.42 of a point at 11,667.34
* Energy, metals, banks up; gold stocks down (Adds details, quotes)
By Claire Sibonney
TORONTO, June 14 (Reuters) - Toronto’s main stock index ended flat on Monday as gold shares retreated, while a debt downgrade of Greece offset investor confidence in global economic recovery after robust European industrial data.
The index had been sharply higher in the morning but started dropping after Moody’s Investors Service downgraded Greece’s credit rating by four notches to junk status early in the afternoon. [ID:nN14207740]
“It probably shouldn’t be a surprise because I think Greek bonds were already trading at junk levels anyway, but that’s a pretty big downgrade,” said Barry Schwartz, vice-president and portfolio manager at Baskin Financial Services.
“The market was feeling good at the end of the week and kind of forgot about the European issues, and whoops, we got a sharp reminder again today.”
Gold prices rebounded to above $1,220 late in the session but still ended lower on the day. [GOL/] Gold-mining stocks fell 2.3 percent with Barrick Gold Corp (ABX.TO) down 2.8 percent at C$43.20, and Agnico Eagle (AEM.TO) off 2.2 percent at C$60.91.
“How much higher can gold go? And these gold stocks are not getting priced at $1,200, $1,250 gold anyway,” Schwartz said.
“People are looking for sectors that probably have better torque if the economy isn’t headed towards a double-dip recession and those areas would be oil and copper, better places to be in.”
Oil and copper prices rallied after upbeat data on euro zone industrial output fed optimism about the global economy. [O/R] [MET/L]
The energy sector added 0.2 percent and base metal miners gained 1.2 percent. Imperial Oil IMO.TO edged up 0.1 percent to C$40.58, and Teck Resources TCKb.TO rose 1.1 percent to C$35.10.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended 0.42 of a point higher at 11,667.34, after rising sharply earlier in the day.
Schwartz said he expected the market to remain choppy this summer with thinner volumes and plenty of doubts about global growth.
“There’s obviously the added uncertainty this year of the European worries of a double-dip recession, a slowdown in China, the list goes on and on. There’s no end to the backlog of bad news,” he said.
“On the flipside the good news is that valuations are quite cheap and with interest rates probably going to stay stubbornly low for a long time, it makes stocks, especially those with high dividends much more attractive.”
Bruce Latimer, a trader at Dundee Securities, said bargain-hunting was in force early in Monday’s session.
“People are looking to try to pick up stocks they think have been hit,” he said.
Some of those names are in “defensive” or noncyclical sectors in which negative impact from Europe would likely be limited. The index’s telecoms sector, for instance, was up 0.8 percent, and the utilities group was up 0.9 percent.
Market players were also eyeing an options expiration later in the week that will likely spur more market volatility.
$1=$1.03 Canadian Reporting by Claire Sibonney; editing by Peter Galloway