The Toronto stock market was sharply lower Wednesday amid pessimism that a gathering of European Union leaders in Brussels will come up with a plan to contain the euro-zone debt crisis.
The S&P/TSX Composite Index dumped 147.14 points, or 1.3%, to greet noon Wednesday at 11,304.64
The Canadian dollar slid 0.71 to 97.24 cents U.S.
BMO Financial Group beat expectations as it said its second-quarter net income was up 27% from the same time last year, rising by $215 million to nearly $1.03 billion.
The banking group’s profit amounted to $1.51 per share before adjustments. After adjustments, BMO’s net income was $982 million or $1.44 per share, eight cents higher than expectations. But its shares lost 28 cents to $54.97.
Meanwhile, a strike against Canadian Pacific got underway just after midnight. CP has suspended its freight service across the country but Teamsters Canada says both sides have agreed to prevent the labour dispute from disrupting commuter rail services that use the company’s infrastructure.
The strike involving about 5,000 CP workers is expected to halt shipments of grain, fertilizer, coal and other goods Canadian Pacific moves along nearly 24,000 kilometres of track in Canada and the U.S. Its shares fell $1.67 to $73.25.
The energy sector fell as Suncor Energy lost 57 cents to $27.73.
The base metals sector fell while July copper contract on the Nymex dropped six cents to $3.43 U.S. a pound, down 11% this month. Teck Resources gave back 59 cents to $29.39.
Euro-zone worries were a weight on the TSX financial sector as Royal Bank slid 55 cents to $51.62.
But the gold sector was slightly higher and Goldcorp Inc. advanced 42 cents to $36.32.
In other earnings news, Canaccord Financial Inc. reported a fourth-quarter loss of $31.8-million or 42 cents a share.
Excluding those items, adjusted net income was $2.1 million or two cents per common share and its shares tumbled 68 cents or 10.35 per cent to $5.89.
Leaders of the 27 European Union countries are meeting for a summit that will focus on Europe’s economic woes and Greece’s political crisis.
There had been hopes ahead of the meeting that leaders would take some action to contain the worsening government debt crisis. But those hopes were dashed as Germany continued to refuse to back the idea of jointly-issued eurobonds.
Proponents of eurobonds say they could help mitigate the crisis by spreading debt risk across the single currency zone.
The summit takes place against a background of increasing worries about Greece’s future in the euro-zone.
An election slated for June 17 is widely considered to be a referendum on the country’s membership of the euro. The main concern is that political parties that are against the terms of the country’s bailout package will win the election.
If Europe then cuts off its funding to Greece, the country may face a messy exit from the euro, raising concerns that other countries might follow.
Worries about the euro-zone have taken a heavy toll on stock markets this month. The TSX has plunged almost 900 points or 7%, although the Toronto market rallied 171 points Tuesday on bargain hunting that followed three straight weeks of losses.
Speaking of things economic, Statistics Canada reported this morning that Canadian retail sales rose by 0.4% in April, to $39.1 billion, a new record, powered largely by auto and clothing sales.
The agency also told us that its composite leading indicator rose 0.3% in April, matching the increase in March, running its monthly win streak to 10. Of the 10 components, seven advanced in March.
ON BAYSTREET
The TSX Venture Exchange stumbled 14.42 points to 1,232.33, while the Nasdaq Canada dropped 6.21 points to 356.50.
All 14 Toronto subgroups remained in the red by noon. Metals and mining toppled 2.4%, while global base metals and stocks in the energy sector each fell 2.1%.
ON WALLSTREET
Tech shares led a broad selloff on Wall Street Wednesday, following disappointing earnings, sales and outlook from Dell.
Worries about Greece leaving the euro-zone added to the pessimism, sending stocks down 1.3%.
The Dow Jones Industrials dropped 166.16 points, or 1.3%, to break for lunch at 12,336.65
The S&P 500 tripped 17.49 points to 1,299.14. The tech-rich Nasdaq Composite Index docked 37.57 points to 2,801.51.
Dell shares plunged about 16%, wiping out all of its gains for the year. Dow components Microsoft and Intel fell more than 3%, while Cisco was down about 1.5%.
Investors are also keeping close tabs on Facebook and the unfolding saga. Investigators are looking into whether Morgan Stanley, the lead underwriter for Facebook's initial public offering last week, shared a negative assessment of the social network with major clients ahead of the IPO.
Shares of Facebook, which lost 18% from its IPO price in the first two days of trading this week, rebounded more 4%.
Weak earnings, sales and guidance from Dell late Tuesday sparked a sharp sell-off in its shares. Rival Hewlett Packard, which is due to report results after the close, were also down about 4%. HP is also widely expect to announce mass layoffs
Automaker Ford Motor had its debt upgraded out of junk bond status by Moody's late Tuesday -- an important benchmark for the automaker that will lower its borrowing costs, and allow it to reclaim collateral it put up for a credit line. Shares were up in morning trading, as were those of rival General Motors, which is awaiting its own upgrade to investment grade.
Homebuilder Toll Brothers reported better-than-expected earnings and revenue that was in line with forecasts before the market open Wednesday. It also upped its guidance for the second quarter.
Shares of Hormel edged higher after the meat processor reported a better-than-expected gain in earnings before the open.
Financial stocks were under pressure early Wednesday, with shares of JPMorgan Chase and Bank of America down more 1%, while Citigroup shed 2.5%.
On the economic slate, new-home sales rose more than expected in April to an annual pace of 343,000, up from 332,000 in March. The report follows a strong report on sales of existing homes Tuesday, in which sales climbed 10%.
The price on the benchmark 10-year U.S. Treasury grew, lowering the yield to 1.71% from Tuesday’s 1.79%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil surrendered $1.51 to $90.35 U.S.
Gold futures for June delivery tumbled $39, or 2.5%, to $1,536.80 U.S. an ounce.
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