CANADA STOCKS-TSX little changed as gold miners offset gains

Fri Jan 25, 2013 11:35am EST

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By Solarina Ho
    TORONTO, Jan 25 (Reuters) - Canada's main stock index was
little changed on Friday, retreating from early session gains,
as lower bullion prices pressured gold miners.
    Gold prices fell after the European Central Bank said banks
would repay 137 billion euros ($183.2 billion) in cheap loans,
opting to hand back early more cash than expected. The move
reassured investors the euro zone banking system is stabilizing,
but undermined their interest in bullion as a hedge against
risk.  
    "The pullback in gold is for good reason today because the
LTRO (long-term refinancing operations) repayment has signaled
shrinkage in the ECB balance sheet. That's the opposite of
what's been happening over the last few years," said Fergal
Smith, managing market strategist at Action Economics.
    Seven of the top nine biggest drags in the index were gold
miners. Kinross Gold Corp led, slumping 4.6 percent to
C$8.59, while Goldcorp Inc fell 1.6 percent to C$35.82.
Barrick Gold Corp was off 1.1 percent at C$33.07.
    Gold mining stocks were down 1.8 percent, while the overall
materials group, where mining firms reside, was down 1.15
percent.
    The Toronto Stock Exchange's S&P/TSX composite index
 was down 2.78 percent, or 0.02 percent at 12,820.84
late morning. Only two of the index's 10 main sectors were in
negative territory.
    Positive investor sentiment from the bank repayments and
news that business morale in the continent's biggest economy,
Germany, improved for a third consecutive month in January,
helped stem losses. 
    "I think broader rotation into risk assets has dominated,
propelled by the higher-than-expected LTRO repayment by European
banks, but also European economic data including the improvement
in the German Ifo," said Smith, referring to the business
climate index put out by the Munich-based Ifo think tank.
    Oil prices, on track to close for a seventh consecutive week
of gains, rose on the back of the economic data along with
recent data out of China and the United States.
    Energy stocks climbed 0.48 percent, led by Canadian Natural
Resources Ltd, which was up 1.1 percent at C$31.00.
    Pacific Rubiales Energy Corp climbed 5.6 percent to
C$23.71 following its announcement that it has discovered oil in
Brazil.
    Potash Corp was the single most positive
influential stock on the index, rising 2 percent to C$43.47. The
fertilizer giant extended Thursday's gains after it's fellow
fertilizer maker, Agrium, raised its profit forecast amid
expectations for higher fertilizer demand.
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