December 29, 2009 / 1:21 PM / 8 years ago

TSX falls as gold miners, Potash Corp weigh

TORONTO (Reuters) - Toronto’s main stock index fell on Tuesday, led by a drop in the materials sector as shares of gold miners suffered from a slide in the price of bullion.

<p>A general view of the TSX (Toronto Stock Exchange) Broadcast Centre in Toronto in this June 20, 2008 file photo. REUTERS/Mark Blinch</p>

Potash Corp of Saskatchewan, the world’s biggest producer of the fertilizer ingredient, also weighed on the sector, falling 2.2 percent to C$114.50 after the company announced a deep price cut for the commodity.

Goldcorp was the biggest heavyweight decliner of the day, down 3.7 percent at C$41.13. The company said toward the end of the session that it would match a rival’s bid to acquire junior miner Canplats Resources.

Four other gold miners were in the top-ten decliners, with Barrick Gold dropping 2.3 percent to C$41.47 and Kinross down 3 percent at C$19.15. Yamana Gold fell 3.2 percent to C$11.97 and Agnico Eagle shed 2.4 percent to C$56.60.

Gold fell below $1,100 an ounce, snapping a three-day winning streak, as a rally in the U.S. dollar undercut the appeal of the precious metal as a hedge against inflation.

The weakness in gold and the strength in the greenback was in part due to economic data in the United States that showed a bigger-than-expected rise in consumer confidence in December, said Steve Ibel, an institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.

“It’s probably also a bit of an anomaly today, based on the thin holiday trading. I think over the long term, you’re going to see the price of gold go higher,” he said, adding that the U.S. economy was not in the clear yet.

After a four-day pause in trading for the holidays, the S&P/TSX composite index ended down 52.80 points, or 0.45 percent, at 11,701.81. Seven of the index’s 10 main sectors were lower, led by a 1.97 percent decline in the materials group.

Before the break, the TSX had gained for four straight days on the back of encouraging economic data and strong oil.

Corriente Resources Inc, which has a copper-gold project in Ecuador, bucked the downward trend of its peers, rising 13.4 percent, to C$8.56 after it agreed to be taken over by a Chinese suitor for C$679 million ($653 million).

Airline stocks hit some turbulence as warnings went out to U.S.-bound travelers to expect more flight delays and cancellations as security is beefed up in the wake of the failed Christmas Day bombing of a U.S. passenger plane.

Shares Jazz Air Income Fund, which operates Air Canada’s regional feeder network, and WestJet Airlines Ltd fell in early trading, but had pared losses or turned positive by the end of the day.

The Toronto stock market was last open on December 24 and volume is expected to be light for this week’s three trading days as many market players take holidays between Christmas and New Year‘s.

“You probably aren’t going to see much happen at all for the rest of the year,” said Paul Harris, portfolio manager at Avenue Investment Management.

($1=$1.04 Canadian)

Reporting by John McCrank; Editing by Jeffrey Hodgson

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