CANADA STOCKS-Argentine default, Valeant outlook fuel TSX selloff

Thu Jul 31, 2014 4:51pm EDT

* TSX down 194.09 points, 1.25 percent, at 15,330.73
    * Nine of the 10 main index sectors decline
    * Valeant tumbles 7 percent after cutting outlook

    By John Tilak
    TORONTO, July 31 (Reuters) - Canada's main stock index
tumbled on Thursday after a default by Argentina stoked worries
about other emerging-market economies, while shares of Valeant
Pharmaceuticals International dropped sharply after the
drugmaker cut its outlook.
    Also unsettling the market, geopolitical tensions remained
high as Russia announced measures to try to counter U.S. and
European sanctions over Ukraine. 
    The pullback of the benchmark TSX index, which has been one
of the strongest performers among global stock indexes this
year, came after it hit a record high the previous session.
    Argentina's debt default was the country's second in 12
years and came after hopes for a midnight deal with holdout
creditors were dashed. 
    Investors were trying to gauge the effect of the news on
broader financial markets and on other economies, and the
uncertainty resulted in a spike in volatility.
    "When something like Argentina comes out of left field, it
rattles people," said Elvis Picardo, strategist and vice
president of research at Global Securities in Vancouver. 
    "It's possible that we could see more downside, but it's
only in retrospect that we will find out if this signals the end
of the bull market," he added. "I don't think anyone is calling
for that yet."
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 194.09 points, 1.25 percent, at 15,330.73.
Nine of the 10 main sectors on the index were in the red.
    Shares of energy producers gave back 1.8 percent. Canadian
Natural Resources Ltd lost 2.7 percent to C$47.53, and
Talisman Energy Inc fell 3.8 percent to C$11.41.
    Suncor Energy Inc reported a drop in second-quarter
profit late on Wednesday, and its shares shed 2.2 percent to
C$44.77. 
    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 skin-care
products. The stock dropped 7 percent to C$127.83.
 
    Open Text Corp reported a higher-than-expected 42
percent jump in quarterly revenue on Wednesday, largely driven
by higher demand for its cloud services. Shares of the business
software maker shot up 14.5 percent to C$60.64. 
    ($1=$1.09 Canadian) 

 (Editing by Chris Reese; and Peter Galloway)
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