October 27, 2010 / 3:00 PM / 8 years ago

CANADA STOCKS-TSX slides as stimulus doubts hit commodities

* TSX down 132.11 points at 12,552.57

* Eight of 10 sectors weaker (Adds details, quotes)

By Claire Sibonney

TORONTO, Oct 27 (Reuters) - Toronto’s resource-heavy stock index fell on Wednesday as mounting doubts about the size and timing of new U.S. economic stimulus measures pushed up the U.S. dollar and weighed on commodity prices.

Prices for oil, gold and base metals all slipped as a rising greenback made commodities more expensive for holders of other currencies, pressuring the key resource sectors down.

Energy shares fell 0.9 percent and materials skidded 1.7 percent.

Among the biggest decliners were Suncor Energy (SU.TO), down 1.5 percent at C$32.84, Barrick Gold Corp (ABX.TO), down 2 percent at C$46.84, and Teck Resources TCKb.TO, which fell 3.1 percent to C$44.52.

Diversified miner Teck said late Tuesday its third-quarter operating profit rose sharply, but its earnings fell short of market expectations partly due to higher costs.[ID:nN26118379]

At 10:22 a.m. (1422 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 132.11 points, or 1.04 percent, at 12,552.57. Eight of the 10 sectors were weaker, including economically sensitive financials, off 0.7 percent.

Investors had been pricing in large scale U.S. Treasury bond purchases by the U.S. Federal Reserve, lifting equities, commodities and emerging market assets in recent weeks while the greenback has come under pressure against other currencies.

“The short U.S. dollar trade has been overextended ... and that’s causing the commodities to turn around as well because basically most commodities are priced in U.S. dollars,” said Aaron Fennell, senior market strategist at commodity futures brokerage Lind-Waldock, a division of MF Global.

“This is really just a U.S. dollar trade, not so much a commodities trade,” he added.

Weak U.S. data also weighed on riskier assets. Demand for long-lasting U.S. manufactured goods, excluding aircraft, unexpectedly slipped last month and a key gauge of business capital spending plans also fell, underscoring the U.S. recovery’s tepid pace. [ID:nN27216698]

In individual company action, Potash Corp POT.TO was down 0.5 percent at C$149.15. The fertilizer giant filed an amended complaint on Tuesday in its lawsuit against hostile suitor BHP Billiton (BHP.AX). [ID:nN26177952]

Canadian Pacific Railway (CP.TO) fell 1 percent to C$66.35, despite reporting a 28 percent jump in third-quarter operating profit on Wednesday, on the back of increased freight revenue. [ID:nN26150309]

Corus Entertainment (CJRb.TO) slipped 0.7 percent to C$21.40, after the media company reported a 64 percent drop in fourth-quarter profit, hurt by higher expenses, but raised its dividend 25 percent. [ID:nSGE69Q0IW]

Among the gainers, Research In Motion RIM.TO added 1.7 percent to C$57.10, after it introduced its new BlackBerry Bold 9780 smartphone. [ID:nWNAB7342]

TMX Group (X.TO) gained 2.6 percent at C$34.43, after the Toronto Stock Exchange operator reported a 22 percent rise in third-quarter profit, helped by lower expenses, and raised its dividend by 5 percent. [ID:nN26158365]

$1=$1.03 Canadian Reporting by Claire Sibonney; editing by Rob Wilson

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