CANADA STOCKS-Gold miners drag TSX lower after U.S. jobs data

Fri Jul 5, 2013 5:01pm EDT

* TSX falls 31.75 points, or 0.26 percent, to 12,134.91
    * Six of 10 main index sectors decline
    * Barrick hits 21-year low on bullion drop

    By John Tilak
    TORONTO, July 5 (Reuters) - Canada's main stock index fell
on Friday after a robust U.S. jobs report revived worries that
the U.S. Federal Reserve might be set to roll back its stimulus
program, a concern that hit both bullion prices and gold-mining
shares.
    Shares of gold producers dropped nearly 3 percent as the
jobs figures diminished the safe-haven appeal of bullion.
Barrick Gold Corp, the world's largest gold miner, lost
close to 5 percent of its market value and hit its lowest level
in about 21 years.
     Friday's data showed U.S. job growth was stronger than
expected in June and that the employment count for the previous
two months was higher than initially reported. 
    "It's good news for the economy but bad news for the people
who think that quantitative easing is going to be here forever.
It's not," said Irwin Michael, portfolio manager at ABC Funds.
    "Once you get palpable results that the economy is getting
better, you don't want to see the Fed poking around too much,"
he added. "You want to see the economy getting stronger on its
own."
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 31.75 points, or 0.26 percent, at
12,134.91. 
    Six of the 10 main sectors on the index were in the red.
    The materials sector, which includes mining stocks, declined
the most among the major groups, giving back 1.6 percent. Most
commodity prices fell on Friday as the jobs figures pushed up
the U.S. dollar, which made greenback-priced commodities more
expensive. 
    Gold miners, especially, tumbled as the price of the
precious metal fell as the U.S. dollar rose. Barrick
dropped to C$14.57, and early in the session hit its lowest
level since May 1992, and Goldcorp Inc lost 1.4 percent
to C$25.46.
     "You're going to see a lot of volatility in the sector
going forward," said Marcus Xu, portfolio manager at MY Capital
Management Corp in Vancouver. 
    "If an investor likes gold at this point, given that it has
pulled back quite a bit, it is better to buy the physical
commodity rather than the (stock)," he added. "You need a very
high gold price to support valuations on some of these
companies."     
     Shares of telecommunications providers gave back 0.5
percent. Rogers Communications Inc dropped almost 1
percent to C$40.84.
    Energy shares inched higher, and financials gained 0.1
percent. In the financials group, Bank of Montreal 
added 0.7 percent to C$61.61.
    The jobs numbers offered another sign that the U.S. economic
recovery is gathering speed and might prompt the Fed to tighten
monetary policy this year. Some in the market, however, are
betting that the Fed may prolong its bond buying or even
intensify it, Xu said.
    Investors "should be more focused on what's happening on the
underlying economy than on what the Fed is going to do," he
added. "Eventually the market has to be able to function on its
own, without the support of the Fed."
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