The Toronto stock market was lower Tuesday afternoon as commodity prices gained ground but investors were cautious amid a fresh flare-up of worry over the European debt crisis.
The S&P/TSX Composite Index ended the day down 57.15 points to 13, 595.12
The Canadian dollar eked up 0.10 cents to 102.38 cents U.S.
The TSX was closed Monday for the Victoria Day holiday and played catch-up to losses that piled up on stock markets around the globe after Standard and Poor's lowered its outlook on Italy's A-plus sovereign-credit rating from stable to negative last Friday. The ratings agency cited potential political gridlock that could derail the government's plan to balance its budget by 2014.
In addition, severe losses for Spain's Socialist ruling party in regional elections during the weekend raised questions over the political will in the country to carry on with austerity measures.
But the main concern centres on whether Greece will restructure its debt, a scenario which ratings agency Moody's said would constitute a default, which could badly hit the other debt-laden euro countries.
The energy sector dropped strength with Talisman Energy down 50 cents at $19.82 and Cenovus Energy gained 18 cents to $34.15.
Metal prices also advanced with the July copper contract on the Nymex ahead two cents to $4.01 U.S. but the base metals sector was down substantially. Teck Resources declined $1.45 to $47.24 and First Quantum was down $2.10 to $130.78.
The financials sector also gave up ground, ahead of the release of quarterly earnings reports from most of the big banks this week.
Bank of Montreal, which reports Wednesday, gave back 67 cents to $61.50 while National Bank was down $1.23 to $80.21.
The gold sector was stronger, as Barrick Gold Corp. advanced $1.25 to $45.63 and Goldcorp Inc. was ahead 89 cents to $48.39.
In corporate news, Valeant Pharmaceuticals International Inc. will acquire Lithuania-based pharma company AB Sanitas for $432.6 million in cash. Its shares were flat at $48.32.
TMX Group shares were down 18 cents to $43.88 after its board of directors rejected a $3.6-billion takeover proposal from a Canadian consortium of banks and pension plans. The operator of the Toronto stock exchange said Friday the Maple Group bid breeds too many uncertainties, including regulatory and debt risks.
It added that the bid is not superior to its proposed merger with the London Stock Exchange Group.
Kirkland Lake Gold Inc. said Monday it has recorded its highest level of gold production for its final month and quarter of fiscal 2011 and also for the full year. The junior gold miner said its Ontario mine produced 10,175 ounces in April, the first time it has produced more than 10,000 ounces in a single month.
Production for the quarter was 23,466 ounces and for all of the 2011 fiscal year, 81,860 ounces. Its shares gained 15 cents to $14.25.
ON BAYSTREET
The TSX Venture Exchange fell 4.37 points to 2,027.07 while the Nasdaq Canada index moved forward 1.27 points to 658.19
In Toronto, all but three of the 14 subgroups were lower midday. Metals and mining and health-care stocks slid 1.9% each, while industrials stumbled 1.4%.
The three gainers were gold, up 1.6%, materials, ahead 1%, and consumer staples, inching up 0.04%.
ON WALLSTREET
In New York, investors were on edge Tuesday as they faced a series of headwinds that just don't seem to be going away: a slowing U.S. recovery, European debt problems, and the end of the Federal Reserve's bond-buying program.
The Dow Jones industrial average gave back 25.05 points to 12,356.20, with JP Morgan Chase and GE pressuring the blue-chip index. Chevron and Exxon Mobil, which got a boost from oil prices, were the biggest gainers on the Dow.
The S&P 500 subtracted 1.09 points to 1,316.28. The Nasdaq Composite Index lost 12.74 points to 2,746.16
May has been especially rough for the stock market. The Dow and S&P 500 have both lost more than 3%, and the Nasdaq has tumbled 4% since the start of the month.
Rating agencies Standard and Poor's and Fitch have issued pessimistic outlooks for Greece, Italy and Belgium during the last few days.
While the risks may put a lid on gains in the near-term, investor's don't need to worry about an end to the two-year old bull market. Stocks have doubled from their March 2009 lows -- at a record pace.
And for the year, stocks remain in positive territory: The Dow is up nearly 7% while the S&P 500 and Nasdaq are about 4% higher.
AutoZone was among the S&P 500's best performers. Shares of the auto parts retailer jumped 6% after the company delivered quarterly earnings and sales above expectations.
Shares of entertainment products maker Sony rebounded, ticking up 5.3%. Shares slipped nearly 4% in the previous session following disappointing quarterly results due to the earthquake and tsunami in Japan.
Russian search giant Yandex debuted on the Nasdaq under the ticker 'YNDX' after going public late Monday. The stock jumped 48% from its IPO price of $25 U.S. a share.
On the economic front, a government report showed that new home sales rose 7.3% to an annual rate of 323,000 units in April. Economists were expecting an annual rate of 300,000 sales for April.
The price on the benchmark 10-year U.S. Treasury gained back some lost ground, pushing the yield down to 3.12% from 3.13% late Monday. Treasury prices and yields move in opposite directions
Oil prices faded three cents to $99.52 U.S. a barrel.
Gold futures for June delivery rose $7.90 to $1,523.30 U.S. an ounce.
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