July 6, 2011 / 3:05 PM / 8 years ago

CANADA STOCKS-TSX drops as China rate hits energy shares

 * TSX drops 34.22 points, or 0.25 pct, to 13,391.08
 * Seven of 10 index sectors fall
 * Sino-Forest delays tour of assets, shares drop 20 pct  (Adds details)
 TORONTO, July 6 (Reuters) - Toronto’s main stock index was lower on Wednesday morning as slumping oil and gas shares offset strength in gold mining issues.
 Market sentiment was fragile after a downgrade of Portugal’s credit rating heightened concern about the euro zone’s finances, spurring a flight to safe-haven gold and to gold-mining shares.
 But the announcement of another increase in Chinese interest rates hurt most commodities, and oil prices dropped, pushing down Toronto’s energy shares. [O/R] [GOL/]
 Index decliners were led by Suncor Energy (SU.TO), down 0.77 percent at C$38.53, while Cenovus Energy (CVE.TO) lost 1.6 percent to C$35.92. Talisman Energy TLM.TO fell 1.8 percent to C$19.84.
 Top advancers were mostly gold miners, led by Barrick Gold (ABX.TO), up 1.3 percent at C$44.84. Eldorado Gold (ELD.TO) jumped 5 percent to C$15.61.
 At 10:30 a.m. (1430 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 34.22 points, or 0.25 percent, at 13,391.08. Seven of the index’s 10 main sectors declined, led by a 1 percent drop in energy issues. The materials group, home to gold miners, was up 0.36 percent.
 “The market doesn’t feel like it’s going to spiral out of control and certainly money is flowing into golds here,” said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services.
 Weaker-than-expected U.S. data on Wednesday also put pressure on the index. The pace of growth in the U.S. services sector dipped modestly in June, while prices paid fell to the lowest level since August 2010. [ID:nN1E7650GW]
 The Institute for Supply Management said its services index fell to 53.3 last month from 54.6 in May. The reading fell shy of economists’ forecasts for 54.0, according to a Reuters survey.
 But Schwartz said the most influential data will come at the end of the week, with jobs reports for June from the United States and Canada on tap.
 Shares of embattled Chinese forestry company Sino-Forest TRE.TO dropped more than 20 percent to C$4.16 in early trade. The company said it is postponing a tour of its forestry assets because many analysts have halted coverage of the company. [ID:nN1E76502A]
 ($1=$0.97 Canadian)  (Reporting by Ka Yan Ng; editing by Peter Galloway)                  

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