August 10, 2011 / 2:48 PM / 8 years ago

CANADA STOCKS-TSX weaker, but off early lows as gold buoys

 * TSX down more than 1 pct as negative sentiment returns
 * Nine of 10 sectors weaker
 * U.S. stocks drop more than 3 pct, reversing rally
 By Andrea Hopkins
 TORONTO, Aug 10 (Reuters) - Toronto’s main stock index fell more than 1 percent in early trade on Wednesday, with investor sentiment quickly souring after Tuesday’s brief rally as fears about the U.S. and European economies returned.
 U.S. stock markets opened sharply lower and were down about 3 percent in early trade, also erasing a big chunk of Tuesday’s snap-back rally as investors’ well-worn fears about the economy and high levels of public debt looked set to generate more volatile trading.[.N]
 “It makes you wonder if it wasn’t just a dead cat bounce. At the end of the day we still have the same sort of structural problems in terms of economics and the debt situation not only in the United States but also in Europe,” said Serge Pepin, head of investments at BMO Investments Inc.
 “Although we saw a nice pickup yesterday, it is back to reality.
 Weaker financial and industrial issues led losses in Toronto, offsetting gains by gold producers.
 At 10:23 a.m. (1423 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 176.19 points, or 1.46 percent, at 11,933.07. Nine of 10 sectors were lower.
 The drop in shares erased some of Tuesday’s 438-point gain. The one-day rally in North American shares came after the U.S. Federal Reserve said rates would remain near zero into 2013, reassuring investors that interest rates would not hinder any economic recovery. The Fed also gave a negative growth outlook.
 Canada’s big banks and insurers led losers in early trade. Manulife Financial Corp (MFC.TO), North America’s largest life insurer, dropped 7.1 percent to C$12.25, while the two largest banks, Royal Bank of Canada (RY.TO) and Toronto-Dominion Bank (TD.TO), fell 3.3 percent and 3.6 percent, respectively.
 Gold producers helped limit losses, boosted by a more than 1 percent rise in gold prices. The yellow metal has chalked up record highs in recent days as concerns over U.S. and euro zone debt lingered. [GOL/]
 Barrick Gold Corp (ABX.TO) rose 1.6 percent to C$47.58, while Goldcorp (G.TO) rose 0.9 percent to C$47.67 and Yamana Gold (YRI.TO) climbed 1.8 percent to C$14.10. Agnico Eagle (AEM.TO) and Eldorado Gold Corp (ELD.TO) also benefited from the continuing surge in gold prices, rising 2.1 percent and 2.0 percent, respectively.
 Energy shares were down 1 percent as Brent crude prices were up slightly but off earlier highs. [O/R]  (Editing by Jeffrey Hodgson)                  

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