CANADA STOCKS-TSX recovers from 1-week low on U.S. budget hope

Wed Nov 28, 2012 3:11pm EST

* TSX falls 27.22 points, or 0.22 percent, to 12,084.41
    * Eight of 10 sectors decline

    By John Tilak
    TORONTO, Nov 28 (Reuters) - Canadian stocks pared most of
their early losses on Wednesday after comments from a top
Republican fueled hopes for a U.S. budget deal that would avert
a "fiscal cliff" of tax hikes and spending cuts that threatens
to drag the United States back into recession.
    Toronto's main stock index hit a one-week low in early
dealings, led down by mining and energy stocks, as fresh doubts
over the resolution of the U.S. fiscal crisis hurt investor
sentiment and pulled commodity prices lower.
    Democrats and Republicans have been locked in a stalemate
over how to solve the crisis, and Senate Majority Leader Harry
Reid on Tuesday expressed disappointment that there was "little
progress." Investors were also skeptical about the impact of a
deal reached earlier this week to reduce Greece's debt.
 
    But the market perked up a bit after U.S. House of
Representative Speaker John Boehner on Wednesday said
Republicans were willing to put revenues on the table to get a
U.S. fiscal deal if Democrats agreed to spending cuts.
 
    "The market is fixated on the perception of which way the
talks on the fiscal cliff are going. That's the single biggest
driver," said Elvis Picardo, strategist and vice president of
research at Global Securities.
    "The underlying tone of the market is positive. There is
hope that some resolution will be achieved. Barring any
macroeconomic shocks, we're looking for a positive close for the
end of the year," he said of the outlook for the TSX.
    At midafternoon, the Toronto Stock Exchange's S&P/TSX
composite index was down 27.22 points, or 0.22
percent, at 12,084.41. Earlier in the session, the index hit
12,004.49, its lowest point since Nov. 20. TSX is up about 1.1
percent since the start of the year.
    "Investors are looking for a statement of how the United
States really plans to resolve this problem. So far there
doesn't seem to be a plan," said Fred Ketchen, director of
equity trading at ScotiaMcLeod.
    Material and energy stocks, which make up more than half the
index's weight, fell 0.5 percent and 0.6 percent, respectively.
Eight of the index's 10 main sectors were lower.
    Gold miners dropped as gold prices fell 1.5 percent. 
Goldcorp Inc was down 0.3 percent at C$38.85, and
Eldorado Gold fell 1.8 percent to C$14.63. Silver
Wheaton Corp fell 1.1 percent to C$35.98, tracking a
1.4 percent decline in silver prices. < XAG=>
    Oil producer Suncor Energy Inc, down 1.6 percent at
C$32.36, was the biggest drag on the index. Oil prices hit a
12-day low on Wednesday. 
    In other news, Canadian Tire Corp Ltd agreed to buy
closely held hockey chain Pro Hockey Life Sporting Goods Inc for
C$85 million. Its shares were down 0.4 percent at C$66.73.
 
    SNC-Lavalin Group lost 1.6 percent to C$39.86 after
the Quebec-based engineering and construction company's former
chief executive was arrested on three fraud-related charges,
adding to a series of allegations about the company's ethics.
 
    The financial sector, the biggest on the index, was little
changed. Royal Bank of Canada, which will kick off the
quarterly bank earnings season start on Thursday, was up 0.2
percent at C$58.16.
    "The bank earnings should be a big mover for the TSX. If
they come in pretty strong, that could be just the catalyst that
the TSX needed to get going," Picardo said.
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