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TSX Ends Lower Amid China Economy Concerns -- Canadian Commentary

Canadian stocks closed near a two-week low Tuesday, as commodity prices declined amid demand concerns on worries of economic growth slowdown in China.

Toronto's main index, the S&P/TSX, closed Tuesday at 12,430.70, down 49.00 points or 0.39 percent. The S&P/TSX Composite Index touched an intraday high of 12,473.89 and a low of 12,336.89.

The TSX Venture Index closed at 1,570.70, down 28.08 points or 1.76 percent. The index opened at 1,588.47 compared to its previous close of 1,598.78.

Stocks reacted sharply to economic growth concerns after China earlier today, raised retail gasoline and diesel prices for a second time this year, between 6 percent and 7 percent. This was the biggest increase in nearly 3 years.

Commodities took a further hit when BHP's iron ore division president Ian Ashby talking to the press in Perth said the company sees a flattening of iron ore demand from China and that demand growth would drop to single digits. With indications of an economic slowdown in China, mining stocks plummeted globally.

Among major decliners on the S&P/TSX Index were the Energy, Metals & Mining, and the Financial Indices. The gainers included the Material and the Global Gold Indices.

Light Sweet Crude Oil futures for April delivery dropped $2.48 or 2.3 percent to close at $105.61 a barrel on the NYMEX on Tuesday.

The Energy Index shed 1.35 percent with Suncor Energy Inc. dropping 1.23 percent, Talisman Energy Inc. (TLM.TO) down 2.48 percent, and Canadian Natural Resources Limited (CNQ.TO) down 1.86 percent. Athabasca Oil Sands Corp. (ATH.TO) declined 2.74 percent, while Encana Corp. (ECA.TO) fell 1.68 percent. Coastal Energy Company (CEN.TO) dived 7.58 percent.

Transportation systems maker Bombardier (BBD.B.TO) shed 0.25 percent, while Blackberry maker Research In Motion (RIM.TO) dropped 1.62 percent.

Viterra Inc. (VT.TO, VTA.AX) shed 0.38 percent after Glencore International plc (GLCNF.PK) agreed to buy the company for C$16.25 per share cash by way of a court approved plan of arrangement, valuing Viterra at around C$6.1 billion on a fully diluted basis.

Gold for April delivery, shed $20.30 or 1.2 percent to close at $1,647.00 an ounce Tuesday on the NYMEX. Global Gold Index gained 0.88 percent.

Among gold stocks, Kinross Gold Corp. (K.TO) gained 3.27 percent, while Torex Gold Resources Inc. (TXG.TO) jumped 5.24 percent. Eldorado Gold Corp. (ELD.TO) was down 0.84 percent, and Barrick Gold Corp. (ABX.TO) gained 0.84 percent. B2Gold Corp. (BTO.TO) gained 1.50 percent, while Goldcorp Inc. (G) was up 1.08 percent.

The Materials Index gathered 0.71 percent with Potash Corporation of Saskatchewan Inc. (POT.TO) climbing 3.90 percent. Uranium One Inc. (UUU.TO) gained 0.32 percent.

The Metals & Mining Index shed 1.16 percent, with Teck Resources (TCK.B.TO) dropped 2.32 percent and First Quantum Minerals (FM.TO) up 1.48 percent. Osisko Mining Corporation (OSK.TO) was down 1.52 percent.

The Financial Index dropped 0.28 percent with Royal Bank (RY.TO) shedding 0.19 percent and Manulife Financial Corp. (MFC.TO) declining 0.59 percent. Sun Life Financial Inc. (SLF.TO) edged up 0.09 percent, while Bank of Nova Scotia (BNS.TO) shed 0.39 percent.

Seismic data services provider Pulse Seismic (PSD.TO) slipped over 2 percent despite reporting higher fourth quarter funds from operations of C$19.92 million or C$0.30 per share compared to C$14.49 million or C$0.22 per share in the same quarter last year.

Meanwhile, Bankers Petroleum (BNK.TO) edged up over 2 percent despite reporting a fourth-quarter profit decline of $0.3 million or $0.001 per share from $4.6 million or $0.019 per share a year ago.

Endeavour Silver (EDR.TO) edged up 0.22 percent after it posted a narrower fourth quarter adjusted loss of $1.5 million or $0.03 per share, while analysts expected earnings of $0.10 per share.

In economic news, new residential construction in the U.S. registered an unexpected decline in February, a Commerce Department report said Tuesday. Nonetheless, housing starts were almost in line with estimates due to an upward revision to the data for January.

The report showed that housing starts fell 1.1 percent to an annual rate of 698,000 in February from the revised January estimate of 706,000. Economists expected starts to edge up to 700,000 from the 699,000 that had been reported for the previous month. However, the revised figured for January reflects the highest level for starts since October of 2008.

New construction of buildings with five units or more, a considerably more volatile number than single-family starts, jumped 28.7 percent to 233,000.

Germany's producer price inflation eased for the fifth month to a 20-month low in February, data from the Federal Statistical Office showed. The producer price index increased 3.2 percent annually in February in line with economists' expectations, slower than the 3.4 percent rise in January.

Elsewhere, U.K. annual inflation slowed further in February to the lowest level since November 2010, data from the Office for National Statistics showed today. Consumer price annual inflation slowed to 3.4 percent in February from 3.6 percent in January. Nevertheless, the inflation figure remained slightly above the 3.3 percent forecast by economists.

by RTT Staff Writer

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