August 16, 2011 / 8:54 PM / 8 years ago

CANADA STOCKS-TSX succumbs to Europe fears as resources drag

 * TSX ends down 152.90 points, or 1.2 pct, at 12,530.71
 * All 10 main sectors weaker, including golds  (Updates to close, adds details, quotes)
 By Claire Sibonney
 TORONTO, Aug 16 (Reuters) - Toronto’s main stock index ended more than 1 percent lower on Tuesday after a French-German summit failed to result in a solution to Europe’s debt crisis and weak German growth data revived worries about the global economy.
 The drop erased all of the previous session’s gains and more. A selloff in commodities weighed heavily on the resource-biased TSX index, which underperformed its U.S. counterparts. [.N]
 Among the biggest decliners, Canadian Natural Resources (CNQ.TO) fell 2.4 percent to C$36.00, Suncor Energy (SU.TO) lost 1.7 percent to C$31.89, and Teck Resources TCKb.TO dropped 3.8 percent to C$42.14.
  After meeting in Paris, German Chancellor Angela Merkel and French President Nicolas Sarkozy detailed plans for closer euro zone integration but did not move to boost the size of the euro zone’s rescue fund or to begin sales of euro bonds, and that soured appetite for risk assets. [nB4E7HT04B]
 “A lot of the good news over the past couple days is being overshadowed by what’s happening in Europe,” said Marcus Xu, director of equity investments at Genus Capital Management in Vancouver.
 He pointed to U.S. industrial output data for July on Tuesday that showed the biggest gain in seven months as the auto sector bounced back from supply disruptions wrought by the devastating earthquake in Japan in March. [nN1E77F0B6]
 “Longer term, there’s a lot of issues to be resolved in Europe and I just don’t think the (European Central Bank) is currently doing all the right things, and now we’re getting into the areas of countries getting into each other’s physical business ... that’s when it gets a little bit ugly.”
 The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended down 152.90 points, or 1.21 percent, at 12,530.71. On Monday, the index rallied 1.13 percent to 12,683.61, its highest close in more than a week.
 “We’re still looking for a real bullish catalyst,” said said Francis Campeau, a broker at MF Global Canada in Montreal. “So far, I think the bounce in the market has been more of a technical bounce from oversold conditions.”
 Many analysts said that markets will stay volatile as they follow headlines on the global economy.
 The euro zone economy slowed sharply in the second quarter, hobbled by sluggish growth in Germany and stagnation in France, raising fears of a longer-term retreat that could derail efforts to resolve the bloc’s debt crisis. [ID:nL5E7JG0N0]
 The Toronto index’s gold-mining subsector ended the day 0.6 percent lower after swinging from gains to losses despite higher bullion prices. [GOL/]
 Shares of embattled Chinese forestry company Sino-Forest TRE.TO tumbled, down 12.3 percent at C$5.34, on concern about the delay of an internal review into allegations of fraud. [nN1E77F0OB]
  ($1=$0.98 Canadian)  (Reporting by Claire Sibonney; editing by Peter Galloway)                                        

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