The Toronto stock market moved lower Thursday, shedding early gains while metal prices lost early momentum and traders focused on Europe’s worsening government debt crisis.
The S&P TSX Composite Index approached noon Thursday down 85.74 points to 11,485.97
The Canadian dollar inched forward 0.09 cents to 95.47 U.S. cents.
The TSX started the session off positive after Germany’s Ifo Institute reported that its monthly confidence index for Europe’s biggest economy rose slightly to 106.6 in November from 106.4 the previous month.
Also, German gross domestic product growth in the third quarter met expectations of 2.5% on a year-to-year basis with gains mostly driven by exports.
The readings helped calm nerves in the markets a day after Germany suffered one of its worst bond auctions since the creation of the euro in 1999.
But despite the positive German data, the main focus in the markets remained Europe’s debt crisis.
Markets gave up early gains after French president Nicolas Sarkozy appeared to temper his calls for the European Central Bank to play a bigger role in solving the debt crisis.
At the end of a meeting with German Chancellor Angela Merkel and Italian Premier Mario Monti, he agreed to support a German effort to change E.U. treaties to improve the governance of the troubled euro-zone. Germany believes that voluntary pledges by national governments are no longer enough to boost market confidence.
Meanwhile, Fitch on Thursday downgraded Portugal to junk bond status, making it even more difficult for the bailed-out country to return to the bond markets.
Fitch cited Portugal’s large fiscal imbalances, its high indebtedness across all sectors and an adverse macroeconomic outlook in reducing Portugal’s credit rating to BB-plus.
Equity markets have been in a deep funk for all of November as investors grow increasingly impatient with the lack of political will to find a comprehensive solution to the debt crisis.
The Toronto market tumbled 223 points on Wednesday in the wake of a failed German bond auction and another warning that France may see its triple-A credit rating downgraded.
Although German and French borrowing rates are well below the 7% level that eventually forced Greece, Ireland and Portugal into seeking financial bailouts, they have been rising markedly in recent days.
The TSX energy sector slipped as lower crude inventory figures for the U.S. supported oil prices.
Talisman Energy declined 18 cents to $12.62 and Canadian Natural Resources gave back 25 cents to $34.74.
The financials sector was down as National Bank lost 45 cents to $64.05 and Scotiabank was off 29 cents to $48.50.
The gold sector fell as Barrick Gold Corp. slipped 70 cents to $49.53 while Goldcorp Inc. faded 41 cents to $50.30.
The consumer discretionary sector was also a major loser, with Gildan Activewear down 32 cents to $23.58 while Shaw Communications lost 22 cents to $20.38.
The base metals sector was the main advancer, up 0.8 per cent even as copper prices lost early momentum with the December copper contract unchanged at $3.28 U.S. a pound. HudBay Minerals fell nine cents to $9.25 and First Quantum Mineral climbed 53 cents to $17.14.
Sherritt International Corp. said its long-time CEO, Ian Delaney, is retiring at the end of the year. Delaney will remain chairman of the Toronto-based mining company while Sherritt’s chief financial officer, David Pathe, will replace Delaney as CEO. Sherritt shares were off three cents to $5.06.
On the economic front, Statistics Canada came out this morning with not-so-exciting news: average non-farm weekly earnings slid 0.3% to $872.75 in September, after an increase in August.
On a year-over-year basis, average weekly earnings rose 1.1%, the smallest increase since November 2009
ON BAYSTREET
The TSX Venture Exchange declined 8.51 points to 1,513.64, while the Nasdaq Canada index faded 12.57 points to 374.20.
All but two of the 14 Toronto subgroups were negative by Thursday’s midday, with materials down 0.9%, while financials and gold slipped 0.8% each.
The two gainers were metals and mining, up 0.6%, while its cousins in global base metals edged forward 0.2%.
ON WALLSTREET
Markets are closed for the Thanksgiving holiday.
The Dow Jones Industrials ended Wednesday down 236.17 points, or 1.7%, to close a short week at 11,257.50.
The S&P 500 dipped 26.25 points, to 1,161.79, while the Nasdaq Composite staggered 61.20 points to 2,460.08.
