TSX falls with US stocks; golds cushion drop

TORONTO: Toronto's main stock market index slipped in volatile trade on Thursday morning, reversing early gains as US stock indexes and oil prices dropped as anxiety gripped markets over what US Federal Reserve Chairman Ben Bernanke would say in a speech on Friday.

Sentiment was also hurt by a steep drop in US heavyweight Apple Inc, a day after co-founder Steve Jobs resigned as chief executive. That news initially helped push up shares of Apple rival Research In Motion but RIM soon succumbed to the negative sentiment and fell 1.1 percent to C$27.95.

Resource shares were the biggest drag on the the index with Suncor Energy, the heaviest decliner, down 2.2 percent to C$29.61, followed by Potash Corp, off 2.4 percent at C$53.36.

Financials, which fell 0.4 percent, had initially led the index higher, supported by news that Warren Buffett's Berkshire Hathaway will invest $5 billion in Bank of America Corp and by optimism for domestic bank earnings after a higher than expected profit posted by Bank of Montreal on Tuesday.

National Bank of Canada lost 1.7 percent to C$71.14, despite reporting on Thursday that quarterly profit rose 15 percent, as analysts voiced concerns over narrower margins on loans and other details of the report.

Investors were nervous as they awaited a key speech by Bernanke in Jackson Hole, Wyoming, due to considerable uncertainty over whether he might signal plans for renewed economic stimulus.

Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri, said it's much more likely that Bernanke will simply go through a laundry list of actions the Fed might be able to take if conditions deteriorate.

"We could either see a negative market reaction because there are expectations that the Fed will pull a rabbit out of the 'hole' so to speak," she said.

"But I think the other side is that investors could take it as good news that the Fed is saying that even though we've seen many weak indicators that we don't think the economy needs more right now."

At 10:55 a.m. (1455 GMT), the Toronto Stock Exchange's S&P/TSX composite index was down 89.95 points, or 0.73 percent, at 12,253.86. All 10 index sectors were weaker.

Precious-metal shares were the lead gainers despite weaker gold prices, which fell as much as $200 an ounce from record highs above $1,900 reached on Tuesday.

Barrick Gold was the most heavily weighted climber, up 0.7 percent at C$48.55, followed by Goldcorp Inc , up 0.4 percent at C$48.95.

"People buy the fiscal gold when they're less comfortable with risk, I think they're buying the gold shares because they look very attractive compared to the gold price in an environment where they're feeling a bit more comfortable with risk," Warne said.

Copyright Reuters, 2011