July 18, 2011 / 9:29 PM / 8 years ago

CANADA STOCKS-TSX drops as debt fears hit; golds cushion fall

 * TSX falls 0.34 percent to 13,254.14
 * Four of five biggest decliners were in financials group
 * Bullion hits record highs in three of last four sessions  (Adds details)
 By Ka Yan Ng
 TORONTO, July 18 (Reuters) - Toronto’s main stock market index closed lower on Monday as frustration that European and U.S. leaders seemed unable to deal with their debt problems intensified.
 But record high prices for safe-haven bullion pushed up gold-mining stocks, tempering the decline in the index, which at one point hit its lowest point in nearly a week.
 The results of European bank stress tests last Friday did little to calm jitters that the euro zone debt crisis is getting worse, while at the same time a breakthrough in the U.S. debt deadlock seemed far off. [MKTS/GLOB] [O/R]
 The anxiety had the biggest impact on Toronto’s financial stocks with four of the index’s top five heavyweight decliners in that group.
 Bank of Nova Scotia (BNS.TO) dropped 1.8 percent to C$56, while Royal Bank of Canada (RY.TO) fell 1.13 percent to C$52.45. Toronto-Dominion Bank (TD.TO) shed 1.2 percent to C$78.28, and Manulife Financial (MFC.TO) sagged 2.6 percent to C$15.57.
 Concerns about the affect of the debt crises on global growth pushed down the price of oil, and that hit Canadian oil and gas producers. The index’s oil and gas group was off 0.33 percent.
 The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 45.40 points, or 0.34 percent, at 13,254.14. Seven of its 10 sectors were weaker.
 The big materials group rose 1.2 percent, driven by gold miners, which were up more than 2 percent. Shares of gold miners climbed after the price of bullion set a record high above $1,600 an ounce. [ID:nN1E76H0G2] [GOL/]
 Barrick Gold (ABX.TO), the world’s top gold miner, rose 2 percent to $47.03, while Goldcorp (G.TO) jumped 2.33 percent to C$52.79.
 Spot gold XAU= rallied as high as $1,607.01 an ounce before paring gains. The price of gold has set record highs in three out of the past four sessions. Gold-mining shares have similarly risen, but at a slower pace than the precious metal has.
 “It seems like some of the gold and silver stocks have done OK, but they certainly haven’t kept pace with the bullion,” said Levente Mady, market strategist at Union Securities in Vancouver.
 “I don’t really expect stocks to be turning around. I think we’re going to continue to struggle this week. I think that gold and silver could continue to outperform.”
 In individual company news, Labopharm DDS.TO ended 3.13 percent lower at 15.5 Canadian cents, reversing an early rally of about 7 percent, after the biotech company cut about a quarter of its workforce.[ID:nL3E7II21R]
 Potash Corp POT.TO weakened slightly, down 0.14 percent at C$56.30, and other fertilizer producers ebbed as a decline in U.S. corn and wheat prices signaled weaker demand for crop nutrients. [ID:nL3E7II1CS] [ID:nN1E76H0CI]
 ($1=$0.96 Canadian)  (Reporting by Ka Yan Ng; editing by Peter Galloway)                                        

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