CANADA STOCKS-TSX drops on caution over U.S. talks

Mon Dec 17, 2012 11:35am EST

* TSX down 38.11 points, or 0.31 percent, at 12,258.61
    * All 10 main sectors decline
    * Gold miners Barrick, Goldcorp stumble

    By John Tilak
    TORONTO, Dec 17 (Reuters) - Canada's main stock index fell
to a one-week low on Monday, led down by its materials and
financial sectors as investors stayed cautious as they sought
clarity on what is happening in U.S. talks to avoid a budget
crisis.
    The materials sector, which includes mining stocks, shed 1
percent after gold prices dropped early in the day. Barrick Gold
Corp was down 1.2 percent at C$33.52, and Goldcorp Inc
<G.TO fell 1.3 percent to C$36.02. Gold prices later erased
losses as prospects for monetary stimulus in Japan countered
uncertainty over the outlook for the U.S. budget talks. 
    Although there appeared to be signs of progress in
negotiations between congressional Republicans and the White
House on averting tax hikes and spending cuts due to kick in
automatically early in 2013, threatening a recession, the market
remained cautious. 
    "Investors may be hedging their bets. If nothing happens,
they want to see what effect that's going to have on the
marketplace, whether it's already priced in," said Irwin
Michael, portfolio manager at ABC Funds.
    "It's very, very quiet. We expect the market to be very thin
and extremely volatile," he said.
    At midmorning, the Toronto Stock Exchange's S&P/TSX
composite index was down 38.11 points, or 0.31
percent, at 12,258.61. All 10 main index sectors were in the
red. Earlier in the session the index hit 12,237.93, its lowest
point since Dec. 10.
    "The sentiment is people would like to be bullish, but they
are waiting for that catalyst, the fiscal cliff or maybe more
indication that the economy is turning around. Once that
happens, we suspect it could feed upon itself and the market
could go significantly higher in 2013," Michael said.
    In company news, miner First Quantum Minerals Ltd 
launched a hostile sweetened offer for Canadian rival Inmet
Mining Corp that values the owner of the giant Cobre
Panama copper project at about C$5.1 billion ($5.2 billion).
 
     Shares of First Quantum were down nearly 3 percent at
C$20.37, while Inmet gained 5 percent to C$73.25.
    The financial sector, the index's largest, was down 0.5
percent, with Royal Bank of Canada falling 0.7 percent
to C$58.75, and Bank of Nova Scotia declining 0.5
percent to C$56.56.
    Sun Life Financial Inc lost 2 percent to C$27.28
after Canada's third-biggest insurer said it will sell its U.S.
annuity business and some life insurance businesses for $1.35
billion to a company owned by shareholders of institutional
asset manager Guggenheim Partners..
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