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TSX Ends 1.4% Lower On Economic Growth Concerns - Canadian Commentary

Canadian stocks plunged to end sharply lower Wednesday, amid global economic growth worries with widespread selling. Investors also weighed the Bank of Canada's move to trim its economic growth forecast for the nation, while leaving its interest rates unchanged and indicating a possible hike in interest rates in the near future.

The Bank of Canada cut its forecast for the country and now predicts 2013 economic growth at 1.5 percent, down from the 2.0 percent projected earlier in January. The International Monetary Fund on Tuesday trimmed its growth projections for the global economy, slashing its global growth forecast for this year to 3.3 percent from 3.5 percent indicated in January. The agency's growth forecast for 2014 was slashed to 4 percent from 4.1 percent expansion seen earlier.

Investors were also largely disappointed with some weak earnings reported by Bank of America Corp. (BAC) and Yahoo! (YHOO). Almost all sub-indices of the S&P/TSX Composite Index were in the red, led by resource stocks with the heavyweight mining sector plummeting.

The S&P/TSX Composite Index closed Wednesday at 11,947.29, plunging 172.63 points or 1.42 percent. The index touched an intraday high of 12,116.14 and a low of 11,916.64.

The Diversified Metals & Mining Index tumbled 7.34 percent, with First Quantum Minerals Ltd. (FM.TO) plunging 9.45 percent and Osisko Mining Corp. (OSK.TO) plummeting 11.36 percent. Lundin Mining Corp. (LUN.TO) dived 9.90 percent, while Teck Resources Limited (TCK.B.TO) dropped 4.86 percent.

The Global Gold Index plummeted 4.36 percent, with gold futures for June delivery shedding $4.70 or 0.3 percent to close at $1,382.70 an ounce an ounce Wednesday on the Nymex.

The Capped Materials Index dropped 3.85 percent, with Potash Corporation of Saskatchewan Inc.(POT.TO) slipping 0.61 percent.

Among gold stocks, Barrick Gold Corp. (ABX.TO) plunged 5.98 percent, Kinross Gold Corp. (K.TO) dived 6.20 percent, and Yamana Gold Inc. (YRI.TO) fell 4.12 percent. Gold Corp. (G.TO) shed 1.38 percent, while Eldorado Gold Corp. (ELD.TO) dropped 4.23 percent.

Latest data from the EIA revealed that U.S. Crude oil inventories unexpectedly dipped by 1.20 million barrels and gasoline stocks dipped 0.60 million barrels in the weekended April 22. Analysts expected crude oil inventories to gain 1.2 million barrels, while gasoline stock are seen shedding 0.80 million barrels last week. Nonetheless, distillate stockpiles, including heating oil, rose 2.4 million barrels, with analysts expecting a decline of 0.85 million barrels.

The Energy Index shed 2.57 percent, with U.S. crude oil futures for May delivery plunging $2.04 or 2.3 percent to close at $86.68 a barrel Wednesday on the Nymex.

Among energy stocks, Suncor Energy Inc. (SU.TO) shed 1.51 percent, Canadian Natural Resources Limited (CNQ.TO) edged down 1.60 percent, Encana Corp. (ECA.TO) dropped 1.92 percent, and Husky Energy Inc. (HSE.TO) lost 2.15 percent.

The Financial Index lost 0.80 percent, with Bank of Nova Scotia (BNS.TO) dropping 1.51 percent, Manulife Financial Corp. (MFC.TO) shed 2.05 percent, and Bank of Montreal (BMO.TO) down 0.32 percent. TD Bank Group (TD.TO) slipped 0.48 percent, while Royal Bank of Canada (RY.TO) dropped 0.15 percent. Canadian Imperial Bank Of Commerce (CM.TO) surrendered 0.54 percent.

The Information Technology Index shed 0.34 percent, with BlackBerry (BB.TO) gaining 0.49 percent.

The Capped Industrials Index was down 1.46 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) shedding 2.03 percent.

Pharmaceutical retailer The Jean Coutu Group (PJC_A.TO) gained 0.70 percent after completion of the sale of 72.5 million shares of Rite Aid Corp., at an average price of $2.20 per share. Net proceeds from the sale was around $158.5 million. The company will also record a gain of $49.7 million relating to the sale in the first quarter.

Base-metals miner Cline Mining Corp. (CMK.TO) jumped 11.11 percent after announcing Tuesday that Brian Tobin has resigned from the Board of Directors effective immediately, to become Vice-Chair of BMO Capital Markets, the investment and corporate banking arm of BMO Financial Group.

International Mining & Infrastructure Corp. Plc. revealed forwarding a proposal to the board of Afferro Mining Inc (AFF.V) with a potential offer to acquire the entire issued and to be issued share capital of Afferro. Shares of Afferro surged 12 percent.

In economic news, the U.S. Federal Reserve's Beige Book showed the economy climbing at a moderate pace, which is better than the previous report that described the economy inching up at a modest-to-moderate pace. The growth was based on the rebound in housing and the automotive sector. The report covers the period from late February to early April.

Meanwhile, minutes of the Bank of England meeting held early April showed Governor Mervyn King and two other policymakers to have voted to increase the quantitative easing, while other six members said further easing might exacerbate inflation expectations and prompt renewed weakness in the pound. The nine-member Monetary Policy Committee unanimously decided to maintain the record low 0.50 percent interest rate.

Meanwhile, data out of the Office for National Statistics showed that the number of persons seeking jobless allowance in the UK declined unexpectedly in March. The number of jobless claims or the claimant count fell by 7,000 from February to a total of 1.53 million in March. Economists had forecast no change in the claimant count. Jobless claims fell by 5,300 between February and January.

by RTTNews Staff Writer

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