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TSX Ends At 3-Month Low As Eurozone Worries Return - Canadian Commentary

Canadian stocks extended losses for a third straight day to close at a three-month low Thursday, as investor concerns over the eurozone debt problems far outweighed some positive economic data from the U.S., China, and Canada.

While the Fed Reserve's decision to ignore the subject of any further monetary stimulus impacted stocks, the lukewarm response to the bond auctions in Spain and Italy was the main factor that swayed investor sentiments.

Spain's 10-year government bonds yields rose to 5.78%, the highest since December, while yields on Italy's 10-year bonds increased to 5.54%, the highest since mid-February.

Toronto's main index, the S&P/TSX, closed Thursday at 12,103.11, down 75.55 points or 0.62 percent. The S&P/TSX Composite Index touched an intraday high of 12,172.08 and a low of 12,051.20.

The TSX Venture Index closed at 1,481.04, down 18.10 points or 1.21 percent. The index opened at 1,493.43 compared to its previous close of 1,499.14.

Most major components of the S&P/TSX Index were in in the red, led by the Energy and Materials Indices. Among gainers were the Metals & Mining and Health Care Indices.

Light Sweet Crude Oil futures for May delivery, gained $1.84 or 1.8 percent to close at $103.31 a barrel on the NYMEX Thursday.

The Energy Index dropped 1.27 percent with Suncor Energy Inc. shedding 2.59 percent and Canadian Natural Resources Limited (CNQ.TO) dropping 2.66 percent.

The Diversified Metals & Mining Index gained 1.03 percent with Orbite Aluminae Inc. (ORT.TO) gaining 5.83 percent, Osisko Mining Corporation (OSK.TO) shedding 2.06 percent, and Teck Resources (TCK.B.TO) down 1.43 percent. Lundin Mining Corp. (LUN.TO) gained 3.52 percent, while. First Quantum Minerals (FM.TO) added over 7 percent.

Eastern Platinum Limited (ELR.TO) jumped 19.70 percent despite reporting a loss for the fourth quarter.

The Financial Index dropped 0.40 percent with Manulife Financial Corp. (MFC.TO) shedding 0.38 percent and Royal Bank of Canada (RY.TO) down 0.40 percent. Bank of Nova Scotia (BNS.TO) lost 0.40 percent, while TD Bank (TD.TO) shed 0.44 percent.

Smartphone maker Research In Motion (RIM.TO) shed 0.71 percent, while transportation systems maker Bombardier (BBD.B.TO) gained 0.25 percent.

The Materials Index lost 1.07 percent, with Potash Corporation of Saskatchewan Inc. (POT.TO) dropping 1.28 percent and Uranium One Inc. (UUU.TO) down 3.31 percent.

Gold for June delivery, the most actively traded contract, gained $16 or 1 percent to close at $1,630.10 an ounce Thursday on the NYMEX. The Global Gold Index shed 1.34 percent.

Among gold stocks, Lake Shore Gold Corp. (LSG.TO) dropped 3.09 percent, Kinross Gold Corp. (K.TO) edged down 0.33 percent, and Goldcorp. (G.TO) shed 0.93 percent. Barrick Gold Corp. (ABX.TO) dropped 1.63 percent.

Lake Shore Gold (LSG.TO) announced the resumption of operations at its Timmins West Mine in Ontario, where production was halted for a week following the death of a worker in an accident.

Broadband network solutions provider Sandvine Corp. (SVC.TO) dived nearly 4.29 percent after reporting a wider first quarter net loss of C$6.50 million or C$0.47 per share compared to C$2.70 million or C$0.02 per share a year ago.

Diamond miner and retailer Harry Winston Diamond Corp (HW.TO) shed 5.31 percent despite reporting higher fourth-quarter net profit of $16.60 million or $0.19 per share, compared to $13.69 million or $0.16 per share in last year. Analysts expected earnings of $0.18 per share for the quarter.

Some positive economic data globally also had little impact on the TSX. Canada's unemployment rate unexpectedly dropped in March, while economic data from both sides of the Atlantic came in mixed. U.K.'s manufacturing output unexpectedly declined, while German industrial output fell by more than expected. From the US, a Labor Department report showed unemployment fell to the lowest levels in almost four years, while China's, the service sector expanded notably in March, albeit at a slower pace.

Statistics Canada said the economy created 82,000 jobs in March helping the unemployment rate ease by 0.2 percentage points to 7.2 percent. Economists expected only 10,000 new positions to be created, leaving the unemployment rate at 7.4 percent.

Separately, the agency said total value of building permits rose 7.5 percent to $6.5 billion in February, sharply reversing an 11.4 percent decline in January. The advance in February was the result of an increase in the non-residential sector, which offset the decrease in the residential sector.

From the U.S., the Labor Department said new claims for unemployment came in at a seasonally adjusted level of 357,000, a decline of 6,000 from the previous week's revised average of 363,000. While the previous figure was revised up somewhat from the 359,000 initially reported, this week's numbers come in lower than the 360,000 predicted by most economists.

From the euro zone, Germany's industrial production declined more than expected in February, data from the Federal Ministry of Economy and Technology showed. Industrial output dropped 1.3 percent in February from a month ago, offsetting January's 1.2 percent growth. Economists had expected a 0.5 percent decrease.

Meanwhile, the Bank of England left its key interest rate unchanged at 0.50 percent, while maintaining its asset purchase program at GBP 325 billion.

China's service sector expanded in March, indicating firms fairly upbeat on their business prospects with confidence jumping to a 11-month high. The headline seasonally adjusted HSBC/Markit Business Activity Index, an indicator of activity in the service sector, read 53.3 in March compared to 53.9 in February.

by RTTNews Staff Writer

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