TSX extends losses after Fed statement

TORONTO: Toronto's main stock index extended its losses on Wednesday afternoon after the Federal Reserve said the US economic outlook remained grim, even as it promised more stimulus action to boost demand.

The Fed, as expected, said it would buy more long-term Treasury securities in an effort to lower rates. At the same time, though, the monetary policy committee noted "there are significant downside risks to the economic outlook," spooking investors.

"The stimulus that they talked about is a lot less than what people were hoping for," said Michael Sprung, president at Sprung & Co Investment Counsel.

"The fear is that things are going to continue at a very very slow pace ... We need to have some sort of a fiscal response as well, which is out of the Fed's hands."

At 2:56 p.m. (1456 GMT) the Toronto Stock Exchange's S&P/TSX composite index was down 106.46 points, or 0.87 percent at 12,103.42. Nine of the 10 main sectors were lower.

Energy issues weighed most heavily on the TSX, sinking 1.5 percent as oil prices fell on reduced demand expectations. Cenovus Energy was down 1.8 percent at C$32.08.

Base-metal miners fell 4.1 percent, dragging the roader materials sector lower as copper prices sank to 2011 lows. Teck Resources, was down 3.1 percent at C$34.99.

Economic uncertainty also weighed on the industrials group, which slid 2.8 percent. Canadian National Railway was the top decliner as it fell 2.7 percent to C$66.77.

Precious metal miners were among the top advancers, even as the price of gold turned lower. Barrick Gold was up 1.4 percent at C$54.50, while Silver Wheaton added 2 percent to C$41.17.

Royal Bank of Canada bucked the trend among banks, rising 0.7 percent to C$47.39, even as the broader financial sector sank 0.5 percent.

Copyright Reuters, 2011