The Toronto stock market turned lower Tuesday despite a sharp rise in crude oil prices amid another round of worry about the European government debt crisis.
The S&P/TSX Composite Index got bruised 147.95 points, or 1.2%, to conclude the day at 11,759.94
The Canadian dollar dumped 0.69 cents to 96.70 cents U.S.
Energy stocks led TSX advances while oil prices advanced. Some analysts attributed the spike in oil prices to military exercises being conducted by Iran in the Strait of Hormuz, a narrow, strategically important waterway between the Gulf of Oman in the southeast and the Persian Gulf.
It is a major exit point for Mideast oil shipments.
Suncor Energy dropped a penny to $29.05, but Imperial Oil climbed 47 cents to $43.83.
Elsewhere on the TSX, the base metals sector declined, as March copper fell two cents to $3.44 U.S. a pound.
Ivanhoe Mines was the major decliner in the group, tumbling $4.71 or 22.1% to $16.57. The drop came after international mining giant Rio Tinto was successful in its arbitration challenge against certain provisions of a "poison-pill" defence adopted by Ivanhoe aimed at preventing an unwanted takeover.
Elsewhere in the sector, Teck Resources lost $1.13 or 3.1%, to $35.52, while First Quantum Minerals fell 82 cents, or 4.1%, to $19.23.
The gold component fell as Barrick Gold Corp. faded 94 cents to $48.29 and Goldcorp Inc. fell $1.42 to $48.10.
ON BAYSTREET
The TSX Venture Exchange settled 32.49 points to 1,458.43, while the Nasdaq Canada index ducked back down 8.75 points to 373.85
All but one of the 14 Toronto subgroups stumbled on the day. Metals and mining stocks fell 5.8%, global base metals shrank 3.1%, and materials shed 2.9%,
There were no gainers; consumer staple stocks were flat at the close.
ON WALLSTREET
In New York, stocks ended in the red Tuesday, giving up an earlier rally, after the Federal Reserve kept rates unchanged and issued a tepid outlook.
The market also remained under pressure from report that said German Chancellor Angela Merkel rejected the idea of increasing Europe's bailout fund.
The Dow Jones Industrials sank 66.45 points to 11,954.90.
The S&P 500 reversed 10.74 points, to 1,225.73, while the Nasdaq Composite tripped 32.99 points to 2,579.27.
All the major indexes started the day about 1% higher, thanks to an initial void of bad news out of Europe.
But stocks pulled back after a Dow Jones report said that German Chancellor Angela Merkel has rejected suggestions to raise the funding limit for the European Stability Mechanism, or ESM, which currently stands at €500 billion. The fund goes into effect next year and may run alongside the €440-billion European Financial Stability Facility.
Shares of electronics retailer Best Buy got slammed after the company reported earnings that fell far short of forecasts.
Intel warned that it will badly miss its sales forecast for the current quarter on Monday, because of the worldwide hard drive shortage caused by massive floods in Thailand. Shares of
Intel dropped nearly 4% in trading Monday, and continued to slip on Tuesday.
Netflix's fell a day after spiking on chatter that the company could be acquired by Verizon. On Monday, a spokesman for Netflix said the company doesn't comment on speculation.
Though political leaders have been taking steps toward a resolution for Europe's debt problems, the details have yet to be worked out.
The euro was under pressure, falling to its lowest level since mid-January, and coming dangerously close to breaching the key $1.30 U.S. level.
Investors are on watch for possible downgrades on European country credit ratings from Standard and Poor's, which warned last week that it may strip some of Europe's biggest economies, like Germany and France, of their AAA-rating.
Meanwhile, the Federal Reserve left interest rates unchanged, as expected, and said that the economy is expanding moderately, with some improvement in labour conditions.
However, the Fed also warned that "strains in global financial markets continue to pose significant downside risks to the economic outlook.”
The central bank also kept silent on plans to improve its communications strategy next year, which investors were hoping for.
On the economic front, retail sales for the month of November rose 0.2%, which was much lower than expected, according to the U.S. Commerce Department. But the disappointing report had little impact on futures.
Retail sales were expected to have increased by 0.6%, after a 0.5% improvement the month prior.
The price on the benchmark 10-year U.S. Treasury regained ground, pushing the yield down to 1.96% from 2.01% late Monday. Treasury prices and yields move in opposite directions.
Oil for January delivery grew $1.86 to $99.63 U.S. a barrel.
Gold futures for February delivery fell $5.10 to settle at $1,663.10 U.S. an ounce.
