The Toronto stock market surrendered an early solid gain Tuesday as the euro again succumbed to selling pressure on the latest wave of worry connected with the European government debt crisis.
The S&P/TSX composite index ended the day off 48.49 points to 11,764.51, after leaping as high as 150 points in the morning.
After a positive start to the trading day, investor nervousness resurfaced which drove the U.S. dollar higher and the euro to $1.2295 U.S., down from $1.2382 U.S. late Monday.
The euro had fallen to a four-year low of $1.2233 U.S. at one point Monday, reflecting investor sentiment that the $1-trillion U.S. aid package which was unveiled a week ago doesn’t go far enough in helping weak European countries deal with potential debt default.
Countries in the worst shape may have to gut spending, which will slow growth throughout the continent.
On the TSX, Suncor Inc. gained five cents to $31.31.
The base metals sector gained, as copper prices climbed after worries that China may tighten lending and slow the economy also helped push the metal sharply lower for the past two sessions.
On Tuesday, the July contract on the Nymex gained nine cents to $3.03 U.S. a pound. Teck Resources climbed 42 cents to $33.53 while FNX Mining fell 70 cents to $10.15.
Financials were up with Royal Bank ahead 60 cents to $60.09 and Bank of Montreal gaining 54 cents to $60.62.
Industrial stocks also lost early lift as Canadian Pacific Railway lost $1.00 to $57.60.
Canadian National shares were down 15 cents to $60.58 after it said Monday it plans to buy back up to three million of its shares in a private deal with an arm’s-length third-party seller.
The company said the price paid will be negotiated with the seller, but it will not be more than the prevailing market price at the time of the purchase.
Gold stocks were lower as Kinross Gold Corp. 18 cents lower to $18.82.
In other corporate news, paper products maker Cascades announced it is launching an antibacterial paper towel to help cut bacteria spread by hand in the food processing and restaurant industries as well as in medical clinics, aircraft, cruise ships and schools. Its shares rose nine cents to $6.52.
A U.S. subsidiary of CGI Group Inc. has won a $73.2-million U.S. contract to modernize and maintain three government health websites that provide information to 44 million beneficiaries.
CGI shares gained 43 cents to $16.15.
In economic news, Statistics Canada said Canadian investors acquired $4.8 billion of foreign securities in March, the largest outflow since May 2008.
Notably, non-U.S. foreign stocks accounted for over 80%, with focus on European and Asian stocks, the agency added. Meanwhile, foreign investments in Canadian securities were down by $616 million.
The Canadian dollar moved down 0.35 cents to 96.43 cents U.S.
ON BAYSTREET
All but three of the 14 TSX subgroups ended the day lower. Global base metals sank 1.6%, industrials were off 1.5% and real-estate stocks swooned 0.9%.
The three gainers were telecoms, up 0.5%, while utilities and financials inched their way only slightly into the green.
The TSX Venture Exchange capsized 14.21 points to 1,540.46, while the Nasdaq Canada index moved 6.75 points lower to 730.92
ON WALLSTREET
In New York, stocks slumped Tuesday as the euro touched a fresh four-year low versus the dollar, keeping Europe's woes front and center and overshadowing better-than-expected earnings from big U.S. retailers.
The Dow Jones industrial average tumbled 114.88 points, or 1.1%, to 10,510.95
The S&P 500 index were down 16.14 to 1,120.80. The Nasdaq composite index lost 36.97 points to 2,317.26.
Stocks had managed some early gains as investors focused on Home Depot and Wal-Mart Stores' earnings and an improved report on home construction. But the broader malaise that has afflicted the stock market recently soon returned.
The stock selloff picked up steam in the afternoon as the euro flirted with and then fell below a four-year low hit on Monday.
One expert said that fears that European debt issues could spark a second recession are overblown as the U.S. economic fundamentals remain positive.
Technology and financial shares led the declines Tuesday. Intel, Cisco Systems, Hewlett-Packard and Advanced Micro Devices were among the big tech losers. Bank of America, Wells Fargo and a number of regional banks all declined, dragging down the KBW Bank index by 3.7%.
The CBOE Volatility index, or the VIX, the market's fear gauge, spiked 7% to $33.19 U.S., its highest point in over a week.
Stocks ended with slight gains Monday after digging out of heavy losses accrued earlier in the day. Markets have been under pressure for several weeks amid worries about the European debt crisis, the deteriorating euro and the impact all of this may have on the global recovery.
Dow retailers Home Depot and Wal-Mart Stores both reported better-than-expected quarterly results.
Home Depot reported a 41% jump in fiscal first-quarter earnings thanks to strength in seasonal items and better profitability. The home improvement retailer also boosted its full-year earnings outlook. Shares lost 1%.
Wal-Mart Stores reported improved earnings from a year ago that beat estimates, but issued a second-quarter earnings forecast that is short of expectations. Separately, the company said it was cutting prices on a number of food and household products. Shares gained 3%.
Economically speaking, housing starts rose 5.8% to an annual rate of 672,000 in April, up from March's revised rate of 635,000. This beat economists' expectations of 655,000.
A report on building permits, considered a gauge of future construction activity, fell short of expectations, though -- falling 11.5% in April to a seasonally adjusted rate of 606,000. The forecast was for an annual rate of 680,000. April permits were down from the previous month, when they were at a revised annual rate of 685,000.
Meanwhile, the producer price index, a measure of wholesale inflation, slipped 0.1% in April, after rising 0.7% in March, the U.S. Labor Department reported. Expectations were for a 0.1% increase. Core PPI, which strips out volatile food and energy prices, rose 0.2% in April, higher than the expected 0.1% rise, after increasing 0.1% the previous month.
Treasury prices gained ground, lowering the yield on the 10-year note to 3.38% from Monday’s 3.47%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil faded 73 cents to $69.35 U.S.
Gold prices tumbled eight dollars to $1,220 U.S. an ounce
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