The Toronto stock market closed flat after enthusiasm over better-than-expected European economic data gave way to a new round of pessimism about the euro-zone debt crisis.
The S&P TSX Composite Index sagged to just above breakeven by the close, gaining only 0.42 points to 11,667.34.
Stock markets had initially surged following a report which showed a 0.8% monthly increase in industrial production in April across the euro-zone, raising hopes that the region's economy would not be badly hurt by the debt crisis involving several European governments.
Canadian oil and gas company Suncor Energy Inc. said Monday that it has agreed to sell Petro-Canada Netherlands B.V. to British oil company Dana Petroleum plc for Euro 445 million or $582 million, including hedging gains.
Suncor shares eased 0.2% to $33.51.
Bombardier was flat around $4.66 after winning the extension of a contract for 182 more Toronto streetcars.
Priszm Income Fund the operator of most of Canada's KFC, Taco Bell and Pizza Hut restaurants, admitted it is "actively pursuing" refinancing options amid sluggish sales. Shares slid 1.7% to 57 cents
Viterra shares slumped 7.1% to $7.64 amid reports suggesting rain in Western Canada has delayed crop planting.
Toronto's Globe and Mail reported China Eastern Airlines Co. Ltd. and WestJet Airlines Ltd. are holding talks to form a partnership. West Jet stock rose 0.3% to $12.23.
Ratings agency Moody's downgraded Greece's bond rating from Ba1 to A3, or "junk" status, amid continued financial concerns for the country. The downgrade comes despite the nearly trillion-dollar aid package passed by the European Union recently, which was aimed at creating a safety net amid global concerns.
In economic news, Statistics Canada said new motor vehicle sales declined 4.7% to 125,792 units in April, falling for a second month. Sales of passenger cars decreased 9.5% to 57,639 units, with overseas-built passenger cars sales dipping by 15.7%.
The Canadian dollar slid 0.27 cents to 96.83 cents U.S.
ON BAYSTREET
Nine of the 14 TSX subgroups remained positive till the closing bell. Metals and mining gained 1.2%, while consumer discretionaries were better by 1.1%, and utilities moved 0.9% higher.
The five laggards were weighed mainly by gold, down 2.3%, materials, sliding 1.8% and health-care stocks, 0.9% less robust.
The TSX Venture Exchange lost 7.62 points to 1,452.78, while the Nasdaq Canada index lopped off 1.82 to 677.19.
ON WALLSTREET
In New York, equities gave up gains by the close Monday after Moody's downgraded Greece's debt rating, reminding investors that Europe's economic woes aren't going away anytime soon.
The Dow Jones industrial average fell 20.18 points to close at 10,190.89
The S&P 500 index lost 1.97 points to 1,089.63.
The Nasdaq composite index nipped up 0.36 points to 2,243.96.
Stocks gained soundly in the morning after a report showed a big jump in industrial output in Europe, boosting the euro and reassuring investors about the global recovery. But the advance lost steam in the early afternoon on news that Moody's cut its debt rating on Greece to "junk status."
Experts said that the Monday afternoon dip was also reflective of the fact that afternoon trading volume was thin, making the market more volatile. In addition, the market has tended to switch direction of late in the last hour or 30 minutes of each session.
However, the reaction to Moody's downgrade was fairly mild compared to how it might have unnerved investors a month ago. That's partly because the news was unsurprising, with Greece continuing to struggle despite European leaders having made billions in loans available to the nation. Six weeks ago, Moody's rival Standard & Poor's cut its rating on Greece's debt to junk.
Concerns that problems in Greece and other debt-plagued European nations would slow the global recovery pummeled U.S. stocks for more than a month. The three major gauges lost more than 10% each -- the technical definition of a "correction" -- on worries that the United States could be headed for a double-dip recession.
But stocks managed to recover at the end of last week and through early Monday afternoon as the focus expanded to include improving corporate earnings and signs the economy is recovering outside the job market.
Caterpillar, United Technologies, IBM and Chevron were among the gainers on the Dow, while DuPont and JPMorgan Chase were among the decliners.
President Obama reportedly wants the company to set up a fund to pay for damages from the leaking oil well, two months after the initial explosion. Lawmakers want BP to make as much as $20 billion U.S. available.
But the company may not be able to comply, as it only had $7 billion U.S. in cash on hand at the end of the first quarter and is currently expected to pay out dividends on June 21st. BP is expected to have discussed the issue of dividends at its board meeting Monday.
Meanwhile, its stock price continues to plummet, losing 8% Monday to $31.28 U.S. per share.
Treasury prices fell, raising the 10-year note's yield to 3.28% from Friday's 3.22%. Bond prices and yields move in opposite directions
The price of a barrel of oil recovered $1.14 to $74.92 U.S.
Gold prices lost two dollars to $1,223 U.S. an ounce
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