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TSX Plummets To End At 3-Month Low On Soft Data - Canadian Commentary

Canadian stocks plunged to end at a three-month low Wednesday, led mainly by resource stocks after a couple of disappointing macroeconomic data out of the U.S., painting a bleak picture ahead of the crucial jobs data later this week. All sub-indices ended in the red, with the exception of the Capped Utilities Index.

In economic news, a report from payroll processor ADP showed private sector employment in the U.S. rose much less than expected in March, while data from the Institute for Supply Management revealed the pace of service sector growth unexpectedly slowed compared to the previous month.

From the eurozone, the International Monetary Fund will contribute 1 billion euros over three years to the 10 billion euro bailout for Cyprus, IMF Managing Director Christine Lagarde said in a statement earlier today. Meanwhile in Cyprus, Haris Georgiades was sworn in as the new finance minister after Michalis Sarris quit the post to facilitate an inquiry into what led the Mediterranean Island to brink of bankruptcy.

The S&P/TSX Composite Index closed Wednesday at 12,422.12, down 259.98 points or 2.05 percent. The index touched an intraday high of 12,688.64 and a low of 12,390.79.

The Global Gold Index plummeted 4.65 percent, with gold futures for June delivery plunging $22.40 or 1.4 percent to close at $1,553.50 an ounce Wednesday on the Nymex.

Among gold stocks, Barrick Gold Corp. (ABX.TO) dived 5.64 percent, Kinross Gold Corp. (L.TO) plunged 5.81 percent, Yamana Gold Inc. (YRI.TO) plummeted 4.46 percent, and Gold Corp. (G.TO) lost 3.60 percent. Eldorado Gold Corp. (ELD.TO) slumped 4.87 percent.

The Capped Materials Index plunged 3.35 percent, although Potash Corporation of Saskatchewan Inc.(POT.TO) gained 0.35 percent.

The Diversified Metals & Mining Index plummeted 3.31 percent, with First Quantum Minerals Ltd. (FM.TO) plunging 3.85 percent and Osisko Mining Corp. (OSK.TO) sharply down 4.59 percent. Lundin Mining Corp. (LUN.TO) dropped 2.59 percent, while Teck Resources Limited (TCK.B.TO) surrendered 3.09 percent.

Data from the Energy Information Administration revealed U.S. crude oil inventories to have moved up by 2.7 million barrels, while gasoline stocks shed 0.60 million barrels in the week ended March 29. Analysts expected oil inventories to add 2.1 million barrels last week.

The Energy Index plunged 3.29 percent, with U.S. crude oil futures for May delivery plummeting $2.74 or 2.8 percent to close at $94.45 a barrel Wednesday on the Nymex.

Among energy stocks, Canadian Natural Resources Limited (CNQ.TO) was down 3.44 percent, while Suncor Energy Inc. (SU.TO) lost 3.30 percent. Husky Energy Inc. (HSE.TO) slipped 1.87 percent, while Encana Corp. (ECA.TO) surrendered 3.96 percent. Talisman Energy Inc. (TLM.TO) plunged 4.75 percent.

The Financial Index dropped 1.39 percent, with Bank of Nova Scotia (BNS.TO) down 1.71 percent, Manulife Financial Corp. (MFC.TO) down 3.19 percent, and Bank of Montreal (BMO.TO) dropped 1.29 percent. Canadian Imperial Bank Of Commerce (CM.TO) surrendered 0.51 percent.

TD Bank Group (TD.TO) gave up 1.24 percent. The bank said its President and Chief Executive Officer Ed Clark will retire on November 1, 2014 at age 67, after 12 years as CEO. He will remain a Director until TD's 2015 Annual Meeting.

Royal Bank of Canada (RY.TO) slipped 1.41 percent, after indicating that it acquired the Athena Energy Group, a natural gas supplier in Quebec, for undisclosed terms.

The Information Technology Index dipped 0.77 percent, with BlackBerry (BB.TO) down 0.85 percent.

The Capped Industrials Index shed 1.78 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) down 0.76 percent.

Meanwhile, Absolute Software Corp. (ABT.TO) jumped 16.39 percent. after announcing a global partnership with Samsung Electronics. Under the partnership, Samsung will embed patented Absolute persistence technology into the firmware of Samsung GALAXY mobile devices as a feature of Samsung KNOX, which will be launched later this year.

Drug maker Valeant Pharmaceuticals International Inc. (VRX, VRX.TO) plummeted 4.67 percent after it lifted its offer to acquire Obagi Medical Products Inc. (OMPI) for $24.00 per share from $19.75 per share in cash. Yesterday, Merz Pharma Group announced a sweetened proposal to acquire all of the outstanding common stock of Obagi Medical Products Inc. (OMPI) for $22 per share in cash.

In economic news from the U.S., a report released by payroll processor Automatic Data Processing, Inc. (ADP) revealed private sector employment increased by 158,000 jobs in March compared to economist estimates for an increase of about 205,000 jobs. While the report also showed that the private sector job growth for February was upwardly revised to 237,000 from 198,000, the job growth for January was downwardly revised to 177,000 from 215,000.

A report released by the Institute for Supply Management revealed that its non-manufacturing index dipped to 54.4 in March from 56.0 in February, although a reading above 50 indicates continued growth in the service sector. The drop surprised economists, who had expected the index to come in unchanged.

Elsewhere, inflation in the euro area decelerated for the third consecutive month in March, but to a lesser extend than forecast by economists, as energy prices increased at a significantly slower pace, initial estimates showed. The harmonized index of consumer prices increased 1.7 percent year-on-year in March after growing 1.8 percent in February. Economists had forecast a quicker slowdown to 1.6 percent. The rate of growth weakened for the third month in a row.

Inflation in the Organization for Economic Co-operation and Development (OECD) area increased in February, after slowing in the previous month as slower growth in food prices more than offset acceleration in the growth of energy prices, latest data showed Wednesday. The consumer price index increased 1.8 percent on an annual basis in February, after rising 1.7 percent in January. In December, the rate of growth was 1.9 percent.

by RTTNews Staff Writer

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