CANADA STOCKS-TSX weakens on drag from commodity prices

Mon Oct 31, 2011 11:23am EDT

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* TSX down 84.18 points, or 0.67 pct, at 12,435.33

* Miners, energy firms sink with commodity prices

By Jon Cook

TORONTO, Oct 31 (Reuters) - Canadian stocks weakened on Monday, at one point falling more than 1 percent, as natural resource companies followed commodity prices lower after Japan's intervention in currency markets.

Commodity prices were hit by a stronger U.S. dollar, which jumped after the Japan intervened to weaken the yen. while returning doubts over the EU's plan to solve the debt crisis added to the cautious tone.

Seven of the Canadian market's 10 main sectors were lower, led by a 1.4 percent drop in materials, which includes base metal and gold miners.

"They all seem to move in a pack and today the pack is going south," said David Baskin, portfolio manager and president of Baskin Financial Services.

The Toronto Stock Exchange's S&P/TSX composite index , which briefly fell more than 1 percent, was down 84.18 points, or 0.67 percent, at 12,435.33 by late morning.

The Potash Corp was the biggest laggard, falling 2.8 percent to C$48.35. First Quantum Minerals , down 5 percent to C$21.14, was another big drag.

Base metals such as copper slipped as the dollar rose and enthusiasm for Europe's debt deal gave way to the view that the region's economic problems are far from over.

Barrick Gold , down 1.2 percent to C$49.87, was also a big weight. Fresh on the heels of its best weekly performance in a month, gold fell more than 1 percent as a spike in the U.S. dollar spooked precious metals investors.

Investors are also concerned this week's G20 economic summit in France may disappoint by not offering more concrete news on the European debt rescue plan hatched last week.

Canadian banking shares were hurt by "lack of details coming out of Europe on how they're going to execute this plan," Baskin said.

Canadian financial stocks were down 0.4 percent. Royal Bank of Canada led the sector down, falling 0.5 percent to C$49.37. Insurer Manulife Financial also dropped 1.7 percent to C$13.45.

Telecom stocks, a traditional safe-haven play, were up 0.8 percent. BCE Inc rose 0.9 percent to C$39.58, and Rogers Communications gained 1.2 percent to C$36.71.

In other company news, Grande Cache Coal shares jumped 66 percent after it agreed to be acquired by Winsway Coking Coal and Marubeni Corp in a C$1 billion ($1 billion) deal fueled by demand from China's steelmakers.

TMX Group shares rose more than 2 percent after the operator of Canada's largest stock market threw its support behind a C$3.8 billion takeover offer from a group of banks and pension funds.

Canadian Pacific Railway Ltd shares rose only slightly after activist hedge fund Pershing Square Capital Management took a major stake in Canada's second largest railway.

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