CANADA STOCKS-Gold miners lead TSX lower after nearing 18-mth high

Fri Jan 25, 2013 5:27pm EST

* TSX down 6.99 percent, or 0.05 percent at 12,816.63
    * Index up 3.1 pct since new year, up 0.7 pct this week
    * Gold miners make up most of the drags on the index

    By Solarina Ho
    TORONTO, Jan 25 (Reuters) - Canada's main stock index dipped
lower on Friday as falling  bullion prices pressured gold miners
and investors paused following a steady climb this year to near
18 month highs.
    The index, which has risen 3.1 percent since the new year,
touched its highest level since Aug. 2, 2011 earlier in the
session before retreating. In the United States, the benchmark
S&P 500 saw its eighth straight day of gains and closed above
the 1,500 level for the first time in more than five years.
    "To see a pause on today is not a surprise. We've had a very
healthy move in the market year-to-date," said Jeff Bradacs, a
portfolio manager at Manulife Asset Management.
    "That's been driven by both good economic data in the U.S.,
signs of encouragement with the housing market. Also we've seen
good earnings."
    Of the S&P 500 companies that have reported results so far
this quarter, nearly 70 percent reported better-than-expected
earnings, according to Thomson Reuters data.
    The Toronto Stock Exchange's S&P/TSX composite index
 finished down 6.99 percent, or 0.05 percent at
12,816.63. The index added 0.7 percent for the week.
    Four of the index's 10 main sectors ended in negative
territory. 
    Six of the top seven biggest drags in the index were gold
miners. Kinross Gold Corp led, slumping 4.7 percent to
C$8.58, while Goldcorp Inc fell 1.6 percent to C$35.81.
Eldorado Gold Corp tumbled 5.3 percent to C$11.55 and
Barrick Gold Corp was off 1.3 percent at C$33.02.
    Overall gold stocks were down 2.2 percent, while the overall
materials group, which includes mining firms, was down 1.1
percent.
    Gold prices fell as the U.S. dollar strengthened and 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.
    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 some of the losses. 
    "We think it will be another good year for equities -- it
might be a bumpy ride, but still a positive ride," said Bradacs.
    Oil prices, which finished a seventh consecutive positive
week, initially rose on encouraging economic data before
investors booked profits. Energy stocks climbed 0.3 percent.
 
    Potash Corp was the most positive stock on the
index, rising 3.1 percent to C$43.93. The fertilizer giant
extended Thursday's gains after fellow fertilizer maker, Agrium,
raised its profit forecast amid expectations for higher
fertilizer demand.
    In corporate news, Pacific Rubiales Energy Corp 
ended 3.6 percent higher at C$23.26, following its announcement
that it has discovered oil in Brazil.
    Telecom company, Telus Corp, said on Friday it had
settled a dispute with U.S. hedge fund Mason Capital Management
LLC, and will go ahead with a share consolidation plan in
February. Telus' voting shares were off 1.1 percent at C$65.03.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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