The Toronto stock market lost early momentum Monday as worries about Spain’s financial sector trumped early optimism about the prospects of Greece remaining in the euro-zone monetary union.
The S&P/TSX Composite Index slid 10.32 points to end the trading day at 11,566.15.
The Canadian dollar gained 0.26 cents to 97.68 cents U.S.
The TSX ran ahead 2.6% last week, snapping a three-week losing run as traders feeling the market was looking oversold picked up stocks beaten down during May. But the TSX is still down a good 6% from May 1.
Worries of a slowing global economy have also taken a toll and the TSX has dropped more than 9% since the 2012 highs of late February.
The industrials sector was the major decliner, as Canadian Pacific Railway shares dropped $1.92 cents, or 2.5%, to $75.25, with the federal government expected to introduce back-to-work legislation late in the day to end the strike by 4,800 CP workers.
Mediated contract talks between Canada’s second-largest railway and the Teamsters union representing locomotive engineers and conductors collapsed Sunday.
Canadian National Railway Co. shares lost $1.54, or 1.8%, to $82.02. CN announced Monday morning that a three-year contract covering 210 train dispatchers in Canada has been ratified by members of the Teamsters Canada Rail Conference.
Worries about euro-zone banks pushed the financials sector down while Scotiabank gave back 21 cents to $50.74.
The energy sector was ahead as Canadian Natural Resources nipped up two cents to $31.72.
The base metals sector dipped as the Chinese report helped push copper two cents higher to $3.47 U.S. a pound. China is the world’s biggest consumer of the metal, which in turn is largely viewed as an economic barometer because it is used in so many industries. First Quantum Minerals was down 20 cents, or 1.1%, to $18.46.
Among gold plays Barrick Gold Corp. faded 33 cents to $40.91.
Research In Motion Ltd. shares notched eight cents higher to $11.40, despite a report that the BlackBerry maker is preparing for a major restructuring.
The Globe and Mail reported that RIM could end up cutting at least 2,000 jobs worldwide. It said the announcement could come just before RIM reports quarterly results on June 2.
On Friday, the Federal government reported that improved economic conditions allowed it to cut its deficit by almost $11 billion in the just completed fiscal year.
Early reports show the deficit stands at $23.5 billion for the 2011/2012 fiscal year, lower than projected both in the March budget and in last fall's economic update.
The Department of Finance was quick to note that the numbers are preliminary and that final results won't be known for months.
Meanwhile there were still worries about how the government debt crisis is hurting other southern European countries. The interest rate, or yield, for 10-year Spanish government bonds on the secondary market — a key indicator of market confidence — was up 13 basis points to 6.42%
The spike came as Spanish lender Bankia said it needs a €19-billion bailout, raising questions about how Spain intends to find the money.
At the same time, Spanish Prime Minister Mariano Rajoy insisted that the country’s banking sector would not need an international rescue.
A rate of 7% is considered unsustainable over the long term and there is concern that Spain might soon be pushed join the ranks of Greece, Ireland and Portugal and seek an international bailout.
Surveys showed Greece's New Democracy party came first in all six opinion polls published on the weekend. That party backs the tough austerity measures that have made it possible for the country to exist on international bailouts.
The survey results were released three weeks before Greeks return to the polls after May election results proved inconclusive. But markets were unnerved after political parties opposed to the bailout terms received unexpectedly high support, raising worries that Greece could exit the euro-zone.
ON BAYSTREET
The TSX Venture Exchange gained 15.74 points to 1,322.54.
All but three of the 14 Toronto subgroups were lower on the day. Industrials faded 1.1%, while utilities tailed off 0.8%, and health-care issues fell 0.6%.
The three gainers were in energy, up 0.4%, metals and mining, up 0.1%, and financials, ahead 0.01%.
ON WALLSTREET
American markets were closed Monday for the Memorial Day holiday.
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