TSX posts biggest loss since February as global bond yields rise

TORONTO (Reuters) - Canada’s main stock index suffered its biggest loss since February on Friday, slumping to a five-week low as higher bond yields in major economies pressured global stock and commodity markets.

A TMX Group sign, the company that runs the Toronto Stock Exchange (TSX), is seen in Toronto, June 23, 2014. REUTERS/Mark Blinch

Higher bond yields came after the European Central Bank on Thursday kept its policy stance unchanged and after comments by Federal Reserve officials that hinted at a U.S. interest rate hike, while the Bank of Japan is studying several options to steepen its yield curve.

The perception that major central banks are reluctant to use more monetary stimulus to depress bond yields has reduced liquidity in global markets and triggered higher volatility, said Matt Skipp, president of SW8 Asset Management.

North Korea conducted its fifth and biggest nuclear test on Friday, adding to risk aversion.

Global developments overshadowed stronger-than-expected domestic jobs data. Canada’s economy added 26,200 jobs in August, recovering some of the positions lost in recent months.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 263.26 points, or 1.78 percent, at 14,540.00. All of the index's 10 major groups ended lower.

For the week, the index fell 1.7 percent.

U.S. crude oil futures settled $1.74 lower at $45.88 a barrel as traders noted that a tropical storm was behind this week’s unexpected slump in U.S. crude inventories. [O/R]

The energy sector tumbled 3 percent, including a 10.4 percent drop in the shares of Crescent Point Energy Corp CPG.TO to C$18.15. The company announced a plan to raise C$650 million by issuing more shares and a C$600 million hike in its capital spending plans.

Pipeline company Enbridge Inc ENB.TO pulled back 1.7 percent to C$58.11 following days of sharp gains after announcing a major takeover.

The materials group, which includes precious and base metals miners and fertilizer companies, dropped 3.6 percent.

Barrick Gold ABX.TO lost 4 percent to C$22.88, while Goldcorp Inc G.TO declined 2.9 percent to C$20.76. Goldcorp has hired Bank of Nova Scotia to help it sell a gold and silver mine in Mexico, sources said.

Spot gold XAU= fell 0.8 percent.

Industrials declined 2.6 percent, including losses for railroad stocks, while financials dipped 0.4 percent.

Gains for life insurance companies helped restrain losses for financials, including a 1.3 percent gain for Manulife Financial Corp MFC.TO to C$18.16.

The CEO of the country’s biggest life insurer said on Thursday that Manulife would consider share buybacks and expected a pause in acquisitions.

Additional reporting by Alastair Sharp; Editing by Nick Zieminski and Cynthia Osterman