TORONTO: Toronto's main stock market index swung lower in choppy trade on Friday, after a 3 percent drop the previous day, as fears persisted that there will be another US recession, though a rally by miners helped cushion the drop.
Banks were among the most heavily weighted decliners, down more than 1 percent. Toronto-Dominion Bank slipped 3.2 percent to C$71.65, Bank of Nova Scotia shed 3.6 percent to C$50.58, and Royal Bank of Canada lost 2.5 percent to C$49.21.
"The market is clinging now to the hope that the (US Federal Reserve) would engage in additional policy steps with (it) looking at Fed Chairman (Ben) Bernanke's speech at Jackson Hole next week," said Fergal Smith, managing market strategist at Action Economics.
At 1:30 p.m. (1730 GMT), the Toronto Stock Exchange's S&P/TSX composite index was down 73.14 points, or 0.6 percent, at 12,113.67. Six of its 10 sectors were weaker.
Smith said the break below the Aug. 16 low around 12,487 signaled a new downleg was underway, which may result in a further drop to lows below 12,000 seen earlier in the month.
Gold miners climbed nearly 2 percent as the price of bullion hit a record high near $1,900 an ounce. Goldcorp was the top heavyweight gainer, up 2.2 percent at C$50.53, while Barrick Gold added 1.3 percent to C$49.95.
"The trade is still defensive right now," said Francis Campeau, broker at MF Global Canada in Montreal.
"A lot of people that argue the way the yield curve has been shifting, how corporate bonds are widening, there are many indicators that are pricing in another recession in the US," he said, adding that Europe's simmering financial crisis is also weighing heavily.
Copyright Reuters, 2011
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