Canadian stocks fell, joining a global retreat by equity markets spurred by North Korea’s attack on South Korea and concerns about slowing economic growth in Europe and China.
The S&P TSX Composite Index tumbled 135.26 points, or 1.1%, by Tuesday’s final bell to 12,793.75
The Canadian dollar skidded 0.47 cent to 97.69 cents U.S.
The benchmark declined for a second day after posting a weekly gain last week, as banks rallied and Western Coal Corp. and Ventana Gold Corp. received takeover bids.
Energy and commodity producers, the largest industry groups in the Index after financial stocks, led the decline as crude oil, natural gas and base metals fell. Suncor Energy Inc., Canada’s largest oil company, and Teck Resources Ltd., its largest diversified mining company, fell.
Suncor dropped 2.7% to $33.95. Teck Resources declined 4.1% to $48.82.
Commodity prices declined as rising yields on Spanish and Portuguese government bonds underscored the risk of a prolonged economic slowdown in the region. Ireland yesterday followed Greece in seeking financial assistance from the European Union.
The outlook for growth in China also deteriorated after people with knowledge of the matter said the country’s biggest banks are poised to hit government-set caps on lending.
Barrick Gold Corp. and Gammon Gold Inc. led gains by gold miners after analysts recommended buying their shares. Barrick, the world’s largest gold miner, was rated "overweight" in new coverage at HSBC Holdings Plc, which set a price target of $65.30. Shares in Barrick leaped 1.7% to $51.95.
Gammon rose 1% to $6.84. The miner with operations in Mexico was upgraded to "speculative buy" from "hold" at Canaccord Genuity Corp.
Eastern Platinum Ltd. fell 9.1 % to $1.59 for among the biggest declines in the S&P/TSX. The platinum miner with operations in South Africa said it would sell 195 million shares at $1.55 to raise $302.3 million.
Economically speaking, Canadian investors will also weigh in on a Statistics Canada report that found consumer prices rose more than expected in October and the release of retail trade figures from September. Together, the reports help paint a picture of the overall health of the Canadian economy.
The nation’s number crunchers found that Canada’s annual inflation jumped half a point to 2.4% last month, as the cost of gasoline, cars, shelter and food all rose. The increase brings the country’s annual inflation rate to the highest it’s been in two years.
Meantime, retail sales increased for the fourth straight month in September, rising 0.6% in current dollars to $36.4 billion. Eight of 11 subsectors reported gains.
The largest dollar increase was a 1.2% advance at vehicle and parts dealers, while sales at general merchandise stores, including department stores, rose 2%. The largest drop was 1.6% at building material and garden equipment and supplies dealers.
ON BAYSTREET
The TSX/Venture Exchange dipped 12.53 points to 2,001.52 while the Nasdaq Canada index stepped back 15.26 points to 716.70
In Toronto, all but one of the 14 subgroups were negative on the day, the global base metals and its cousins among metals and mining stocks suffered 2.9% each, with energy off 1.6%.
The one stalwart was utilities, ahead but 0.2%.
ON WALLSTREET
In New York, stocks were hit with a trifecta of gloom Tuesday as violence erupted on the Korean peninsula, worries about Europe's debt crisis expanded and the Federal Reserve issued a dour economic outlook.
The Dow Jones Industrials hurtled earthward 142.21 points, or 1.3%, to close at 11,036.70.
The S&P 500 was down 17.11 points to 1,180.73. The tech-rich Nasdaq Composite Index was off 37.07 points to 2,494.95.
The retreat was sparked by an exchange of artillery fire along the disputed sea border between North and South Korea Tuesday morning. The skirmish, which killed two South Korean soldiers and wounded several civilians, was one of the worst since the Korean War of the 1950s ended in armistice.
In the currency market, the U.S. dollar and the Japanese yen both rose sharply. Gold prices and U.S. Treasuries also moved higher as investors flocked to safe haven assets.
The stock declines were broad based. Hewlett Packard was the only Dow stock in the black. Shares of the computer maker were up 0.9%, after it reported better-than-expected quarterly results.
Chevron and Exxon both fell about 2% as the stronger dollar pressured oil prices. The dollar also weighed on shares of big multinational firms such as IBM, Caterpillar and 3M.
Clothing retailer J. Crew agreed to be acquired by buyout firms TPG Capital and Leonard Green & Partners for $2.8 billion U.S. Shares of J. Crew rose about 16% shares had been halted most of the morning after rallying as much as 22% in premarket trading.
Blackstone Group's pursuit of electric power provider Dynegy has come to an end after activist shareholders objected to the takeover, Dynegy said in a statement.
Meanwhile, government data that showed the U.S. economy grew at 2.5% annual rate in the third quarter was largely shrugged off by investors.
Trading could be choppy this week, with many market participants taking time off ahead of the Thanksgiving holiday. All U.S. markets will be closed Thursday.
On the economic front, the U.S. economy grew at a better than expected 2.5% annual rate in the third quarter, faster than 2% rate previously reported, the government said before the opening bell.
On the housing front, existing home sales declined 2.2% to a seasonally adjusted annual rate of 4.43 million in October from 4.53 million in September, according to the National Association of Realtors. Economists had expected a sales rate of 4.42 million in the month.
Meanwhile, the Federal Reserve lowered its outlook for U.S. economic growth this year and next. The central bank also projected that unemployment would remain elevated into next year.
But the bleak forecast was expected, and investors are more concerned about geopolitical risks, according to some experts.
The Federal Reserve lowered its estimates for U.S. economic growth this year and next, and raised its outlook for unemployment.
The Fed now expects 2010 gross domestic product to increase between 2.4% and 2.5% this year, compared with an earlier projection of growth between 3% and 3.5%. In 2010, the Fed predicts GDP in the range of 3% to 3.6%, down from the last forecast in June.
The Fed also said the unemployment rate will be between 9.5% and 9.7% for all of 2010. Next year, the bankers believe joblessness could be as high as 9.1%, compared with a previous estimate of between 8.3% and 8.7%.
The price on the benchmark 10-year U.S. Treasury moved up, lowering the yield to 2.76% from 2.81% late Monday. Treasury prices and yields move in opposite directions.
Oil dipped eight cents a barrel to $81.50 U.S. The price of an ounce of gold gained $9.02 to $1,375.74.
Related Stories
