October 31, 2008 / 9:28 PM / in 9 years

CANADA STOCKS-TSX slides along with metal prices

* TSX logs biggest monthly drop in a decade in October

* Benchmark index ends week up 5 percent

* Goldcorp, Centerra, Eldorado fall after results (Adds details)

By Jennifer Kwan

TORONTO, Oct 31 (Reuters) - Toronto Stock Exchange’s main index closed nearly 100 points lower on Friday, logging its biggest monthly drop in a decade, pulled down by falling gold and base metal prices, which were pressured by a stronger U.S. dollar and demand concerns.

Among the heavyweight decliners were oil company EnCana Corp (ECA.TO), which dropped 2.3 percent to C$61.23, and miner Barrick Gold (ABX.TO), which fell 7.8 percent to C$27.56 as the energy and materials sectors retreated.

The S&P/TSX composite index .GSPTSE closed down 93.45 points, or 0.95 percent, at 9,762.76, with four of the index’s 10 main groups lower.

The index had risen strongly in the three previous sessions thanks to firmer commodity prices and was up 5 percent on the week. For October, however, it was off 16.9 percent, its biggest monthly decline since August 1998.

The energy group was 0.5 percent lower on Friday, even though oil rebounded on a late day short-covering rally to settle up $1.85 at $67.81 a barrel. Crude ended the month down more than 32 percent, its biggest monthly fall to date. [ID:nSP407200]

Gold logged its biggest monthly drop in 25 years, hit by a stronger U.S. dollar and recession fears [ID:nLV498323], which helped to push the materials sector 5 percent lower.

Among gold miners reporting quarterly results were Goldcorp (G.TO), which fell 8.1 percent to C$22.54, Centerra Gold (CG.TO), down 12.5 percent at C$1.05, and Eldorado Gold (ELD.TO), down 5.9 percent at C$4.98. [ID:nN31335225]

The TSX composite index fell sharply at the open, tracking losses on global markets as Japan’s interest rate cut failed to ease concerns about the world economic outlook. [ID:nLV17353]

But by the end of the day it had recouped much of its initial 2.5 percent drop, a sign that investor confidence is slowing coming back, said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd in Calgary.

“You’re starting to see greater signs of confidence. We’ve been able to put at least three days together back to back,” Kerkovius said.

“We’re not having these gigantic reaction days any more: one day up, the next day down by the same amount. We tend to be moving in the right direction,” he said.

“I‘m not saying we’re going to go back down and test, but certainly there seems to be a general feeling of more confidence in the market.”

The market was also kept under pressure by news that Canada’s economy shrank 0.3 percent in August on weakness in the manufacturing, wholesale trade and energy sectors. [ID:nN31397290]

While there are signs of easing in credit markets, recent economic data on both sides of the border was “less than stellar,” said Levente Mady, a broker at MF Global Canada, in Vancouver.

“It’s going to be a tough slog going forward in terms of trying to have any sizable gains, although we certainly had a decent bounce from the lows,” he said.

The TSX hit a year-low of 8,537.34 earlier this week as worries intensified that the faltering global economy would further erode markets for commodities such as oil and metals -- major Canadian exports.

Market volume was 501.2 million shares worth C$6.57 billion. Advancers outpaced decliners 991 to 531. The blue chip S&P/TSX 60 index .TSE60 closed 8.29 points lower, or 1.38 percent, at 591.28.

The Dow Jones industrial average .DJI rose 144.32 points, or 1.57 percent, at 9,325.01, while the Nasdaq composite index .IXIC ended up 22.43 points, or 1.32 percent, at 1,720.95. ($1=$1.21 Canadian) (Reporting by Jennifer Kwan; editing by Rob Wilson)

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