CANADA STOCKS-TSX drops as Argentina defaults, Valeant sells off

Thu Jul 31, 2014 11:10am EDT

* TSX down 126.27 points, or 0.81 percent, at 15,398.55
    * Eight of 10 main index sectors decline
    * Valeant tumbles 7.4 percent after cutting outlook

    By John Tilak
    TORONTO, July 31 (Reuters) - Canada's main stock index
declined on Thursday as Argentina's default kindled worries
about the stability of the economic recovery in the region and
shares of Valeant Pharmaceuticals International fell
after the company cut its outlook.
    Further, geopolitical tensions remained high as Russia
announced measures to try to counter U.S. And European sanctions
over Ukraine. 
    The benchmark TSX, which has been one of the strongest
performers among global stock indices this year, pulled back
after hitting a record high in the previous session.
    Argentina defaulted for the second time in 12 years after
hopes for a midnight deal with holdout creditors were dashed.
 
    Investors tried to gauge the effect of the news on broader
financial markets and economies beyond Argentina, and the
uncertainty resulted in a spike in volatility.
    "It's a destabilizing event. It's a wake-up call to
investors that there are still pretty significant risks in some
areas of the emerging markets, including Argentina," said Andrew
Pyle, senior wealth advisor and portfolio manager at
ScotiaMcLeod.
    "The contagion effect of this event is still unclear, and
that's what investors are going to be wrestling with today and
into the weekend," he added.
    The Toronto Stock Exchange's S&P/TSX composite index
 was down 126.27 points, or 0.81 percent, at 15,398.55.
Eight of the 10 main sectors on the index were in the red.
    Shares of energy producers gave back 1.7 percent. Canadian
Natural Resources Ltd lost 1.7 percent to C$48.05, and
Talisman Energy Inc fell 2.7 percent to C$11.54.
    Suncor Energy Inc reported a drop in second-quarter
profit late on Wednesday, and its shares shed 2.1 percent to
C$44.82. 
    Valeant, embroiled in a battle to take over Botox-maker
Allergan Inc, cut its full-year profit and revenue
forecasts to reflect the sale of its rights to several skincare
products. The stock tumbled 7.4 percent to C$127.32.
 
    Open Text Corp reported on Wednesday a
better-than-expected 42 percent jump in quarterly revenue,
largely driven by higher demand for its cloud services. Shares
of the business software maker shot up 14.6 percent to C$60.69.
 

 (Editing by Chris Reese)
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