CANADA STOCKS-TSX stumbles as China data disappoints investors

Thu Jan 23, 2014 4:28pm EST

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* TSX falls 55.23 points, or 0.39 percent, to 13,932.97
    * Nine of the 10 main index sectors decline
    * RBC has biggest negative influence on index

    By John Tilak
    TORONTO, Jan 23 (Reuters) - Canada's main stock index
slipped on Thursday after soft manufacturing data from China
triggered declines in almost every major sector, overcoming a
strong performance by gold-mining shares.
    The big jump in gold-mining shares, buoyed by a 1.4 percent
gain in the price of bullion, failed to arrest the slide.
    Data showed that activity in China's factory sector dropped
in January for the first time in six months. China's Flash
Markit/HSBC purchasing managers index fell to a 49.6 reading in
January from December's 50.5. 
    The export-driven, resource-heavy Canadian market tends to
react sharply to news from China, a major commodity consumer.
    "You're going to see fluctuations in economic data that
comes out of China, which is why we have a bias towards United
States, Canada and Europe," said Andy Nasr, managing director
and senior portfolio manager at Middlefield Capital.
    The Toronto market, which has had a strong start to the
year, eased after hitting a 2-1/2-year high earlier in the
session.
    "In this environment, the valuations are a little bit
stretched. So it only takes a little bit of bad news to
precipitate a selloff," Nasr said. "But longer-term, the trend
certainly supports owning equities in North America and in
developed markets, where we think we're going to see economic
growth accelerate."
    Both the World Bank and the International Monetary Fund
raised their projections for global economic growth earlier this
month.
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 55.23 points, or 0.39 percent, at
13,932.97. 
    "It's quite discouraging to see the flash PMI back under
50," said Colin Cieszynski, senior market analyst at CMC Markets
Canada, referring to the Chinese data.
    "Not only is China not rebounding, but it looks like it may
continue to struggle for some time into this year," he added.
    Nine of the 10 main sectors on the index were in the red on
Thursday.
    Financials, the index's most heavily weighted sector, gave
back 1.1 percent. Royal Bank of Canada slipped 1.5
percent to C$71.42 and had the biggest negative influence on the
index. Bank of Nova Scotia lost 0.6 percent to C$64.21.
    Energy shares stumbled 0.4 percent, with Suncor Energy Inc
 shedding 0.5 percent to C$37.80.
    Shares of gold producers advanced 3.3 percent. Barrick Gold
Corp added 3 percent to C$21.43, and Goldcorp Inc
 rose 4.1 percent to C$26.69.
    In corporate news, Barrick's chief executive said he expects
the miner to record a further impairment charge at its
Pascua-Lama gold-copper project in South America in the fourth
quarter.
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