CANADA STOCKS-TSX dips as gold miners fall in thin trade

Mon Apr 1, 2013 4:58pm EDT

* TSX closes down 54.76 points, or 0.43 percent, at
12,695.14
    * Railway stocks fall on U.S. manufacturing data
    * U.S. manufacturing growth slowed in March


    By Allison Martell
    TORONTO, April 1 (Reuters) - Canada's main stock index
slipped in sluggish trading on Monday as railway shares fell
after data showed the U.S. manufacturing sector grew at its
slowest pace in three months and gold mining stocks extended
their year-to-date decline. 
    The resource-heavy index has fared poorly in recent weeks,
even as equity markets south of the border hit record highs, as
investors shy away from some energy plays and retreat from gold
mining stocks.
    "They have not been a very positive group to be in
recently," Paul Hand, managing director at RBC Capital Markets,
said of the gold miners. "On days when there is nothing
happening (there is) reversion to the mean, and the mean is an
angle downward."
    But Hand said he was not reading too much into the direction
of the market, as volume was low. Several exchanges in Europe
and Asia were closed on Monday, and trading was light in
Toronto.
    The heavyweight materials sector, which includes gold
miners, fell 0.9 percent.
    In a research note, Bank of America Merrill Lynch warned
that year-over-year declines in gold, silver and copper prices
during the first quarter, combined with cost pressures, would
likely hit precious metal miners' earnings, and could weigh on
share prices.
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 54.76 points, or 0.43 percent, at
12,695.14.
    Industrial stocks weighed, and Canada's two main railways
were the two most influential decliners. Canadian National
Railway Co fell 1.8 percent to C$100.26, and Canadian
Pacific Railway Ltd was down 2.7 percent at C$129.00. 
    The pair pulled back after data from the Institute for
Supply Management showed the pace of expansion in the U.S.
manufacturing sector slowed unexpectedly in March.
 
    Canadian National and Canadian Pacific have both moved
sharply higher in the past year, partly because investors view
them as likely beneficiaries as oil producers struggle to move
their product to market via pipelines.
    "They've surprised everybody, caught everybody off guard
over the past year or so with the price explosion. I think a lot
of that is hype and pomp," said Barry Schwartz, a portfolio
manager at Baskin Financial Services.
    Canaccord Genuity analyst David Tyerman called the railways'
valuations "stretched."
    "The stocks have been very strong performers and so they're
going to be vulnerable to any number of things," he said. 
    In the materials sector, Barrick Gold Corp, the
world's largest gold miner, fell 1.2 percent to C$29.48. Before
Monday's move, the stock had fallen nearly 15 percent this year
to date. Yamana Gold Inc fell 1.9 percent to C$15.35. 
    Shares of China Gold International Resources Corp Ltd
 dropped 13.3 percent to C$3.33 after a landslide at an
exploration area near the company's Jiama mine in Tibet trapped
83 people. Rescue workers had recovered 36 bodies by Monday
afternoon, the state-run news agency Xinhua said.
 
    Gold miners have fallen more than 15 percent so far this
year, while the index's broader materials sector is down more
than 10 percent.
    The price of bullion slipped 4 percent in the first quarter
as the euro stayed weak against the greenback and stock markets
rallied.
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