The Toronto stock market stepped back Wednesday, and commodities shifted lower with it, returning some of two days of gains that were fuelled by hope for a successful resolution to the European debt crisis.
The S&P/TSX composite index backtracked 235.22 points, or nearly 2%, to close at 11,585.87
The Canadian dollar was down 1.13 cents to 96.95 cents U.S.
Stock markets have racked up strong advances over the past two sessions with the TSX up over 350 points and the Dow industrials ahead more than 400 points.
Both markets sustained big losses in the neighbourhood of 7% last week over a lack of confidence that European leaders could deal with the euro-zone’s debt crisis and the conviction that global economies were slipping back into recession.
Investors were relieved after the Finnish Parliament voted to expand the eurozone’s bailout fund’s powers which added to hopes for a resolution of the European debt crisis.
Finland is part of the 17-nation euro-zone and its approval is required on bailouts and other help for cash-strapped euro-zone members. Under the new law, the bailout fund will be able to buy government bonds and lend money to a country before it is in a full-blown crisis.
But stocks lost early momentum after Jose Manuel Barroso, the president of the E.U.’s executive arm, on Wednesday said he supports a tax on financial trades that his office estimated could raise euro57 billion a year in Europe to help combat a debt crisis that is threatening the euro currency.
The base metals sector declined, as the December copper contract on the Nymex came off a 16-cent jump, off 12 cents to $3.32 U.S. a pound. Teck Resources lost $1.66 to $30.40 while HudBay Minerals dropped a dime to $10.37.
The energy sector was lower with Suncor Energy down $1.33 to $27.05 and Imperial Oil lost $1.45 to $36.91.
The industrials sector was also a drag as transportation giant Bombardier Inc. fell 27 cents to $3.87
The gold sector was flat as Goldcorp Inc. faded $1.18 to $45.87.
The tech sector gained with CGI Group adding seven cents to $19.50 and Celestica climbed 14 cents to $7.94.
In corporate news, Yellow Media Inc. units plunged 28.5 cents or 50.4% to 28 cents after it said it will book a $2.9-billion goodwill impairment charge in third-quarter and stop paying out future dividends to its shareholders.
The telephone directory publisher said the move comes after it launched a review of its operating plans, which also included an examination of the fair value of its assets.
Montreal-based CAE has sold four Level D full-flight simulators (FFS) to customers in Southeast Asia, the Middle East, Eastern Europe and Australia. The company announced Wednesday that the contracts are worth more than $70 million, and bring the number of FFS sales during its current fiscal year to 15. Its shares slid cents to $10.14.
ON BAYSTREET
The TSX Venture Exchange tumbled 67.75 to 1,502.37, while the Nasdaq Canada index demurred 14.27 points to 434.09
Among the 14 Toronto subgroups, all but two were negative. Metals and mining stocks staggered 6.2%, global base metals were off 4.6%, and materials fell 3.9%.
The lone gainers were health-care stocks, up 0.3%, and consumer staples, gaining 0.1%.
ON WALLSTREET
In New York, investors took a step back Wednesday, as an early stock rally gave way to worries that European leaders may not be moving fast enough to solve Europe's debt problems
The Dow Jones Industrials ended the day deep in negative country, by 179.79 points, or 1.6%, to 11,010.90.
The S&P 500 regressed 24.32 points to 1,151.06, while the Nasdaq dipped 55.25 points to 2,491.58.
Commodity stocks have been among the biggest drags on equities. Energy and commodity companies have pulled down the S&P 500 index. Among the biggest drags on the S&P: Dow Chemical, Occidental Petroleum, oil and gas explorer Schlumberger and mining firm Freeport-McMoRan Copper & Gold.
While investors remain focused on Europe even after markets there closed, traders said more general fears about a possible global recession and slowing consumer demand have dominated the trading day.
Alcoa, DuPont and 3M and were among the biggest decliners.
U.S. banks also traded down. JPMorgan Chase, Bank of America, Goldman Sachs, and Citigroup were all down between 1% and 4%.
Amazon was the Nasdaq's biggest winner after the online retailer announced a $199 U.S. tablet computer.
Family Dollar beat analysts' expectations, reporting quarterly earnings of 66 cents U.S. per share.
Darden Restaurants also released quarterly results in line with analysts' expectations
The Finnish Parliament approved the proposed overhaul of the European Financial Stability Fund, which was created last July to provide low-cost loans to struggling E.U. countries. So far, eight of the 17 euro-zone members have ratified the proposal.
Economically speaking, a U.S. government report on durable goods showed orders were down 0.1% in August after rising 4.1% in the prior month. Economists had expected that orders ticked up 0.1% in August.
The price on the benchmark 10-year U.S. Treasury went back up, pushing the yield down to 2.00% from 2.02% late Tuesday. Treasury prices and yields move in opposite directions.
Oil for October delivery staggered $3.56 to $80.89 U.S. a barrel.
Gold fell roughly 2.5% to $1,618.20 U.S. an ounce, and copper dropped 5% Wednesday.
