The Toronto stock market was lower Monday but losses were held in check by rising gold stocks as the precious metal moved further into record territory amid concerns about European and U.S. government debt.
The S&P/TSX Composite Index closed the day off 45.40 points to 13,254.14
The Canadian dollar faded 0.51 cents to 104.29 cents U.S.
The negative tone on markets follows the release of stress tests conducted on European banks.
On Friday, the European Banking Authority said only eight of the 90 EU banks it assessed failed.
But the prevailing view in the markets is that the tests didn’t give a true picture of the banks’ health since they didn’t model what would happen if a euro-zone country defaulted on its debt. Analysts thought that was particularly surprising given concerns that Greece may be forced to do exactly that.
Meanwhile, the yields, or interest rates, on Italian and Spanish bonds rose again Monday. That means investors are asking for higher and higher premiums to lend them money -- a sign they consider the countries an increasingly bad risk.
At the same time, there was growing unease over the failure of American lawmakers to agree on conditions for raising the U.S. debt limit by an Aug. 2 deadline.
The gold sector rose as Goldcorp Inc. ran ahead $1.16 to $52.75 while Barrick Gold climbed 90 cents to $47.01.
Carpathian Gold Inc. said Barrick Gold will take a 9% stake, or 38.5 million shares, in the gold development company for $20 million. Its shares rose two cents to 60 cents.
Financials led decliners, down almost one per cent with Scotiabank down $1.18 cents to $55.85 and Royal Bank fell 77 cents to $52.28.
Manulife Financial Corp. shares were 42 cents lower to $15.57 after the insurer announced it is selling its Life Retrocession reinsurance business to Pacific Life Insurance Co. for an after-tax gain of $275 million.
A stronger greenback usually helps depress oil prices, which are denominated in dollars, as it makes oil more expensive for holders of other currencies.
The energy sector backed off as Canadian Natural Resources fell 33 cents to $39.44.
Elsewhere in the energy sector, Shell Canada Energy said Friday it is selling its stake in the long-stalled Mackenzie pipeline project in the Northwest Territories, along with other assets in the region.
If built, the Mackenzie pipeline would connect natural gas from near the coast of the Beaufort Sea in the Northwest Territories to northwestern Alberta, where it would link up with TransCanada Corp.’s vast network. Imperial Oil Ltd. is the lead partner on the project and its shares were down 31 cents to $43.92.
The base metals sector declined as copper prices dipped three cents at $4.38 U.S. a pound. First Quantum dropped $2.97 to $132.03.
Industrial stocks also dragged with Bombardier Inc. down 20 cents to $6.18.
On the economic slate, Statistics Canada said this morning that motor vehicles sales declined 6.1% in May to 126,479 units, with North American-built passenger cars accounting for most of the decrease.
What’s more, said the agency, foreigners boosted their holdings in Canadian securities in May to $15.4 billion, led by investment in federal government debt instruments. Meanwhile, Canadian investors acquired $6 billion of foreign stocks while removing $2.5 billion of foreign debt instruments from their holdings.
ON BAYSTREET
The TSX Venture Exchange inched back 2.88 points to 2,004.50, while the Nasdaq Canada index was lower by 9.18 points to 547.23
In Toronto, 10 of the 14 subgroups lost ground on the day. Financials suffered 1.5%, while industrials slipped 1.3%, and the metals and mining group capsized 1.1%.
The four gainers were led by gold, up 2.1%, while materials advanced 1.2%, and consumer staples inched up 0.3%.
ON WALLSTREET
In New York, stocks sold off sharply Monday, as worries about Europe's debt crisis and uncertainty over the U.S. debt ceiling kept investors on edge.
The Dow Jones Industrials came off its lows of the day, but still fell 94.57 points to close at 12,385.20
The S&P 500 shed 10.70 points to 1,305.44, and the Nasdaq Composite Index moved lower by 24.69 points to 2,765.11.
U.S. stocks took their cues from Europe after results from the latest bank stress tests fanned concerns about the challenges facing the European Union as it struggles to resolve the debt crisis in Greece.
Those worries weighed on shares of U.S. financial institutions, with Bank of America, American Express, Citigroup, JPMorgan and Travelers all trading lower.
But the declines were broad, with all 30 Dow components in the red. Industrial names Alcoa Caterpillar and Boeing were among the hardest hit.
In Washington, policy makers made little progress over the weekend on a budget deal to raise the nation's debt ceiling.
Early Monday, rating agency Moody's went so far as to suggest the debt ceiling itself should be eliminated to bring greater stability and avoid "periodic uncertainty."
In total, more than a fifth of the S&P 500 and half of the 30-member Dow Jones industrial average will report their results this week.
After the closing bell, IBM will report its quarterly results. Analysts surveyed by Thomson Reuters expect the technology giant to earn $3.03 U.S. a share.
Halliburton reported better-than-expected net income of $739 million U.S., or 80 cents U.S. per share. The oil services company also beat revenue forecasts. Shares rose initially but eased about 0.5% later in the day.
Citing strong demand, toymaker Hasbro reported a 33% jump in net income to $58.1 million U.S., or 42 cents U.S. per share. Despite the strong report, shares fell nearly 4%.
Shares of WebMD Health Group plunged more than 30% after the online healthcare information site slashed its sales and earnings guidance for 2011.
Fallout from a phone hacking scandal continued to wrack News Corp. Authorities arrested and then released former News of the World editor Rebekah Brooks over the weekend. News Corp.'s stock was off 4.5%.
Shares of LinkedIn fell nearly 6.5% after analysts at JPMorgan downgraded the stock to 'neutral' from 'overweight.'
The price on the benchmark 10-year note lost ground, raising the yield back to Friday’s 2.91%. Treasury prices and yields move in opposite directions
Oil for August delivery slipped $1.36 to $95.89 U.S. a barrel.
That uncertainty drove investors to gold, which ended at a record high of $1,602.40 U.S. an ounce. Investors see gold as the best place to park their money when there's economic or political uncertainty.
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