Canadian stocks ended in the red Thursday, on economic data from the U.S. and continued concerns over the eurozone debt crisis with investors seemingly nervous ahead of the critical Greek elections on Sunday. Market sentiments were also impacted by eurozone contagion fears as the Spanish and Italian bond auction saw yields reaching record levels.
While U.S. new jobs claims rose in the week ended June 9, falling energy prices have led to a larger than expected drop in consumer prices in May.
Spain's benchmark 10-year yield hit a euro-era record of 7 percent, while the Italian 10-year yield was close to 6.30 percent. Yields above 6 percent are seen unsustainable, and markets concerned that Italy would be the next in line to seek a bailout.
Moody's downgraded Spain's debt rating by three notches to just above junk, while Cyprus was also downgraded. Both nations will be on review for further possible downgrades.
Toronto's main index, the S&P/TSX, closed Thursday at 11,466.50, down 31.37 points or 0.27 percent. The S&P/TSX Composite Index touched an intraday high of 11,517.28 and a low of 11,423.24.
The TSX Venture Index closed at 1,252.33, up 8.45 points or 0.68 percent. The index opened at 1,252.98 compared to its previous close of 1,243.88.
Major gainers of the S&P/TSX Index were the Metals & Mining, Energy and the Health Care indices. Among decliners included the Materials, Financials and the Global Gold indices.
Oil prices gained on hopes that the OPEC will leave its production ceiling unchanged. While unconfirmed news reports to the OPEC stand prevail, there were also reports of pressure on Saudi Arabia to cut production to take pressure off oil prices. Investors also weighed oil demand ahead of the Iran oil embargo to begin July 1.
U.S. crude oil futures for July delivery gained $1.19 or 1.6 percent to close at $83.91 a barrel Thursday on the NYMEX.
The Energy Index gained 0.02 percent with Canadian Natural Resources Limited (CNQ.TO) moving up 0.59 percent and Encana Corp. (ECA.TO) gathering 3.28 percent. Bonavista Energy Corp. (BNP.TO) dropped 2.98 percent., while Talisman Energy Inc. (TLM.TO) shed 1.30 percent. Suncor Energy Inc. (SU.TO) slipped 1.18 percent.
The Metals & Mining Index gained 0.81 percent with First Quantum Minerals Limited (FM.TO) gathering 2.43 percent and Teck Resources Limited (TCK_B.TO) edging up 0.68 percent. Osisko Mining Corp. (OSK.TO) gained 0.60 percent, while Lundin Mining Corp. (LUN.TO) shed 0.50 percent.
Gold futures for August delivery gained $0.20 to close at $1,619.40 an ounce Thursday on the NYMEX. The Global Gold Index dropped 0.50 percent.
Among gold stocks, Eldorado Gold Corporation (ELD.TO) edged up 1.02 percent, while Ivanhoe Mines Ltd. (IVN.TO) edged down 0.19 percent. Goldcorp. (G.TO) dropped 1.60 percent, while Lake Shore Gold Corp. (LSG.TO) plunged 11.21 percent. Barrick Gold Corp. (ABX.TO) edged up 0.48 percent, while Kinross Gold Corp. (K.TO) surged 5.56 percent.
The Materials Index shed 0.13 percent with Uranium Participation Corp. (U.TO) up 1.27 percent, while Potash Corporation of Saskatchewan Inc. (POT.TO) slipped 0.97 percent.
Transportation systems maker Bombardier Inc. (BBD.A.TO), dropped 1.80 percent.
Smartphone maker Research In Motion Limited (RIM) shed 3.55 percent after announcing the nomination of Timothy Dattels as an independent director on its board, replacing Antonio Viana-Baptista.
The Financial Index slipped 0.40 percent, with Royal Bank of Canada edging down 0.27 percent, while Manulife Financial Corp. (MFC.TO) dropped 1.86 percent. Toronto-Dominion Bank (TD.TO) shed 0.27 percent, while Bank of Nova Scotia (BNS.TO) dropped 0.10 percent.
Sports good manufacturer Bauer Performance Sports Ltd. (BAU.TO) eased 0.25 percent after announcing that it would acquire Cascade Helmets Holdings, Inc. for about $64 million.
In economic news, Statistics Canada said the New Housing Price Index continued its upward momentum in April, adding 0.2 percent after recording a 0.3 percent gain in March. The metropolitan regions of Toronto and Oshawa, and Edmonton were the top contributors to the increase in April.
Separately, the agency said Canadian industries operated at 80.7 percent of their production capacity in the first quarter, up 0.2 percentage points from the previous quarter. An increase in capacity use in manufacturing was partially offset by declines in the resource and energy sectors.
From the U.S., a Labor Department report showed falling energy prices have led to a larger than expected drop in consumer prices in May. The consumer price index, a measure of inflationary pressure on the economy, fell by 0.3 percent in May after remaining relatively unchanged in April. This was the largest monthly decline since December 2008. Economists expected consumer prices to decline to a somewhat smaller level of 0.2 percent.
Separately, the Labor Department estimated new jobless claims at a seasonally adjusted level of 386,000 for the week ended June 09, an increase of 6,000 from the previous week's revised level of 380,000. The larger than expected increase comes on top of revised figures of initial jobless claims for the week ending June 2 at 377,000. Most economists predicted a drop in new jobless claims for the week at 375,000.
Elsewhere, eurozone inflation slowed to a 15-month low in May as initially estimated, data from Eurostat showed. Annual inflation dropped to 2.4 percent from 2.6 percent in April. Nonetheless, inflation continues to stay above the European Central Bank's 'below, but close to 2 percent' target.
Meanwhile, the Swiss National Bank decided to retain the exchange rate cap and the near-zero interest rate. The bank also noted that it "will not tolerate" further gains in the currency and is prepared to take necessary measures at any time. The central bank said it will continue to enforce the minimum exchange rate of CHF 1.20 per euro "with the utmost determination." The bank said it is prepared to buy foreign currency in unlimited quantities for this purpose.
by RTT Staff Writer
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