CANADA STOCKS-TSX slumps, hit by fears of Italian gridlock

Mon Feb 25, 2013 4:50pm EST

* TSX ends down 50.76 points, or 0.40 percent, at 12,650.87
    * Morning rally to highest level since Jan. 30 reverses
    * Banks, other financials lead declines as earnings loom

    By Alastair Sharp
    TORONTO, Feb 25 (Reuters) - The prospect of a divided
Italian parliament prompted a late retreat in banking and other
Canadian financial stocks on Monday, pushing the main Toronto
equity index into the red after it had earlier hit a three-week
high.
    Voting projections in Italy show no coalition garnered
enough votes to form a government, reviving fears about an
extended period of uncertainty in Europe's third-largest
economy. 
    "The basic problem is that the whole Europe situation had
been shunted to the back-burner ever since the beginning of this
year," said Elvis Picardo, strategist at Global Securities in
Vancouver. 
    "The latest developments show that there is a degree of risk
that is still attached to the continent," he said. "It's causing
investors to rethink some of their assumptions about the
market."
    Royal Bank of Canada fell 1 percent to C$63.59,
insurer Manulife Financial Corp lost 2.1 percent to   
C$14.84 and its rival, Sunlife Financial Inc, slipped
1.9 percent to C$28.34.
    Picardo said investors may also be feeling more cautious
about bank earnings, which are due to be reported this week and
next, after a recent string of weak domestic housing,
employment, inflation and retail sales data. 
    The Toronto Stock Exchange's S&P/TSX composite index
 ended down 50.76 points, or 0.40 percent, at
12,650.87. 
    It had earlier hit 12,832.71, its highest level since Jan.
30.
    The tide turned in the last hour of trade, and seven of the
10 sectors ended in negative territory.
    Energy stocks took a beating, with Suncor Energy Inc 
falling 1.4 percent to C$31.52 to end the day as the heaviest
weight on the index.
    It had earlier risen, along with fellow oil sands producer
Canadian Natural Resources Ltd, after a Barron's
article suggesting each stock could gain 25 percent in the next
year. 
    Canadian Natural Resources finished up 0.6 percent at
C30.55.
    Gold miners provided some of the only gains, as the price of
bullion rose in part on the back of the Italian uncertainty.
 
    Barrick Gold, the world's biggest producer, gained 2.2
percent to C$31.81, while four more gold miners rounded out the
top five positive influences on the index.
    Shares in BlackBerry ended flat at C$13.48, giving
up early gains after the smartphone maker's chief executive told
a German newspaper that sales of its make-or-break BB10 line
were going better than expected and that the company had
increased production to keep up.
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