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TSX Settles Lower On Eurozone Concerns - Canadian Commentary

Canadian stocks settled slightly lower Monday, as eurozone concerns resurfaced with yields at the Spanish bonds auction surging above the 6 percent mark, while investors ignored some upbeat economic data from the U.S.

Spain's ten-year borrowing costs increased above the 6 percent mark on Monday, ahead of a key debt auction tomorrow, adding to worries over the contagion risk of the sovereign debt crisis and economic health. Spain's 10-year bond yield rose to 6.15 percent, the highest since December 2011. Borrowing costs near 7 percent are seen as unsustainable, and in the past, countries were forced to seek bailout assistance.

While most Asian markets ended lower overnight after economic data from China raised concerns over the global economy, European stocks ended in the green despite the surge in Spanish 10-year bond yields.

Toronto's main index, the S&P/TSX, closed Monday at 12,037.59, down 2.80 points or 0.02 percent. The S&P/TSX Composite Index touched an intraday high of 12,121.36 and a low of 12,016.18.

The TSX Venture Index closed at 1,432.45, down 27.48 points or 1.88 percent. The index opened at 1,463.60 compared to its previous close of 1,459.93.

Major components of the S&P/TSX Index such as the Diversified Metals & Mining, Materials, Energy, and the Gold Indices were in the red. Among gainers were the Financial and Health Care Indices.

The Financial Index gained 0.70 percent with Manulife Financial Corp. (MFC.TO) moving up 0.24 percent, Royal Bank of Canada (RY.TO) up 0.73 percent, and Bank of Nova Scotia (BNS.TO) advancing 0.98 percent.

From the US, the financial services giant Citigroup Inc. (C) posted a first-quarter profit that declined to $2.93 billion or $0.95 per share from $3.0 billion a year ago. Excluding items, quarterly net income was $1.11 per share, much better than the $1.00 per share expected by analysts for the quarter.

Metals & Mining Index plummeted 1.99 percent, led by First Quantum Minerals (FM.TO) down 3.38 percent and Teck Resources Ltd. (TCK_B.TO) up 0.25 percent. Lundin Mining Corp. (LUN.TO) was down 0.91 percent.

The Energy Index edged down 0.13 percent, with Light Sweet Crude Oil futures for May, made a slight gain of $0.10 or 0.1 percent to close at $102.93 a barrel on the NYMEX Monday.

Among energy stocks, Suncor Energy Inc. gained 1.18 percent, while Canadian Natural Resources Limited (CNQ.TO) ended flat. Talisman Energy Inc. (TLM.TO) gained 0.56 percent, while Penn West Petroleum Ltd. (PWT.TO) shed 0.06 percent.

Smartphone maker Research In Motion (RIM.TO) gained 2.72 percent, while transportation systems maker Bombardier (BBD.B.TO) slipped 0.75 percent.

Gold stocks were down with futures for June delivery shedding $10.50 or 0.6 percent to close at $1,649.70 an ounce Monday on the NYMEX. The Global Gold Index slipped 1.61 percent.

Among gold stocks, IAMGOLD Corp. (IMG.TO) shed 2.13 percent, while Yamana Gold Inc. (YRI.TO) lost 2.11 percent. Eldorado Gold Corp. (ELD.TO) dropped 1.25 percent and B2Gold Corp. (BTO.TO) declined 5.08 percent. Kinross Gold Corp. (K.TO) dropped 1.48 percent, while Barrick Gold Corp. (ABX.TO) shed 1.69 percent.

The Materials Index dropped 1.44 percent, mostly on gold mining stocks. Uranium One Inc. (UUU.TO) dropped 4.66 percent, while Eastern Platinum Limited (ELR.TO) surrendered 1.32 percent. Potash Corporation of Saskatchewan Inc. (POT.TO) edged up 0.47 percent.

In corporate news from Canada, Fairborne Energy (FEL.TO) said it would divest its interest in the Greater Sinclair area located in Manitoba and Saskatchewan for $80 million. The stock gained 7.61 percent.

Uranium miner Quest Rare Minerals (QRM.TO) shed 4.04 percent, despite reporting a narrower first quarter net loss of $0.56 million compared to a net loss of $7.55 million in the year ago quarter.

Real estate leasing company Gendis Inc. (GDS.TO) reported higher fourth quarter net earnings of C$17.8 million or C$1.28 per share compared to to C$1.3 million or C$0.09 per share for last year's fourth-quarter.

Silver ore miner Endeavour Silver Corp. (EDR.TO) said it would acquire 100 percent interests in AuRico Gold's operating El Cubo silver-gold mine in Guanajuato State, Mexico and the Guadalupe y Calvo silver-gold exploration project in Chihuahua State, Mexico, for total consideration of up to $250 million. The stock shed nearly 4 percent.

In economic news, Statistics Canada said foreign investors resumed their acquisition of Canadian securities in February, adding $12.5 billion to their holdings, with the federal government bonds attracting a major share. Meanwhile, Canadian investors reduced their holdings of foreign securities by $2.2 billion, marking the first such divestment in 10 months.

From the U.S, the Commerce Department's initial estimates indicate total U.S. retail sales at a seasonally adjusted level of $411.1 billion for March, which is an increase of 0.8 percent over February. And while February's retail figures were revised down slightly to show 1 percent growth rather than the 1.1 percent initially reported, the March sales levels came in significantly higher than the 0.3 percent growth predicted by most economists.

Homebuilder confidence in the U.S. showed an unexpected decline in the month of April, according to a National Association of Home Builders report on Monday, The decrease marks the first drop in seven months. The NAHB/Wells Fargo Housing Market Index dropped to 25 in April from 28 in March. The decrease came as a surprise, as economists expected the index to edge up to 29.

The New York Fed said its general business conditions index plunged to 6.6 in April from 20.2 in March, with a positive reading indicating an increase in manufacturing activity. Economists had expected the index to edge down to 18.0.

The eurozone trade balance moved to a surplus in February, but was lower than forecast by economists, data from Eurostat showed. The trade surplus amounted to 2.8 billion euro in February compared to revised 7.9 billion euro deficit in January. Economists expected a surplus of 3 billion euro. In February last year, the balance was in a deficit of 2.8 billion euro.

by RTTNews Staff Writer

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