CANADA STOCKS-U.S. fiscal fears drag TSX to five-week low

Tue Oct 8, 2013 4:55pm EDT

* TSX falls 95.82 points, or 0.75 percent, to 12,692.41
    * Nine of 10 main index sectors decline
    * Talisman in focus after Icahn stake
    * Manitoba Telecom drops after government rejects unit sale

    By John Tilak
    TORONTO, Oct 8 (Reuters) - Canada's main stock index dropped
on Tuesday to its lowest in five weeks as a political standoff
in Washington highlighted the crisis over the U.S. debt limit
and threatened to push the world's biggest economy into default.
    Talisman Energy Inc found itself in the spotlight
after activist investor Carl Icahn disclosed a stake in the
company late on Monday. The stock jumped in early trade before
paring those gains to slip with the broader market.
 
    The Toronto market gave up its gains as hopes of a speedy
resolution to the fiscal crisis took a beating after President
Barack Obama said he would be willing to negotiate on budget
issues only after the Republicans agreed to re-open the federal
government and raise the debt limit with no conditions.
 
     "It's a bit of a buyers' boycott," said Irwin Michael,
portfolio manager at ABC Funds. "People are gun-shy, and they
want to sit and watch until the dust settles."
    "We believe it will be resolved and the market will
eventually do better," he added. "However, in the short run
people's imagination is running wild."
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 95.84 points, or 0.75 percent, at
12,692.41, after falling to as low as 12,682.94, its weakest
level since September 3.
    Michael expects the index to end the year higher after the
current U.S. fiscal turmoil eases.
    Nine of the 10 main sectors on the index were in the red on
Tuesday.
    Energy shares dropped despite rising oil prices. Suncor
Energy Inc stumbled 2.1 percent to C$35.81, and Canadian
Natural Resources Ltd fell 0.2 percent to C$32.11.
    Talisman shares slipped almost 2 percent to C$12.89.
    Financials, the index's most heavily weighted sector, fell
0.3 percent. Royal Bank of Canada, the country's biggest
lender, lost 0.2 percent to C$66.37. 
    Valeant Pharmaceuticals International Inc gave back
3.6 percent to C$109.80 and had the biggest negative influence
on the market.
    Shares of Manitoba Telecom Services Inc shed 8.5
percent after the company said late on Monday the Canadian
government rejected the proposed sale of its Allstream division
to Accelero Capital Holdings due to "unspecified national
security concerns."