MW: Losing gold, energy stocks pummel Toronto stocks
LOS ANGELES (MarketWatch) -- Canada's benchmark index lost more than 300 points Monday, as shares in gold companies slid following a downgrade of the sector. Energy stocks also got hit by a sharp drop in oil prices.
The benchmark S&P/TSX Composite Index (CA:ISPTX: news , chart , profile ) closed down 302 points, or 3.6%, to 8,249.5. The index rose 1.5% on Friday and finished last week up 0.4%.
Decliners outstripped advancers on the exchange Monday, by 867 to 446.
The mining and metals index lost nearly 18%, diverging from advances in the underlying metals. Teck Cominco Ltd. (CA:TCKB: news , chart , profile ) lost 11.4% and HudBay Minerals Inc. (CA:HBM: news , chart , profile ) fell 10.9%.
The S&P/TSX capped materials index, where gold stocks are listed, accelerated its losses to close down 11.6% for the day. The S&P/TSX energy index floundered 12.4%.
UBS downgraded North American gold producers, citing price appreciation "given the recent strong run in gold equities over the past month," and in the context of the broker's gold price forecasts, said Brian MacArthur, global mining and metals analyst at UBS.
The firm put Barrick Gold (CA:ABX: news , chart , profile ) , Agnico-Eagle Mines Ltd. (CA:AEM: news , chart , profile ) , Eldorado Gold Corp. Kinross Gold Corp. and Goldcorp. on its downgrade list.
UBS increased its base gold multiple from to 1.65 times earnings, from 1.55 times earnings, "which is within the historical trading range."
Kinross shares fell 3.1%, Goldcorp shares lost 2.1% and Barrick shares shed 2%,
Gold on Monday rose for the first time in three sessions on safe-haven buying. The February contract closed up $9.80, or 1.2%, at $847.20 an ounce on the New York Mercantile Exchange. Copper also won back some of its 7.1% loss last week. Read more in Metals Stocks.
Energy hammered
Canadian oil stocks collapsed as crude futures reversed lower. The February contract tumbled nearly 6% Monday to below $40 a barrel, as demand concerns outweighed news that the Organization of Petroleum Exporting Countries could further cut production. See Futures Movers.
Talisman Energy Inc. lost 5.2%, Oilexco Inc. fell 8.8% and Suncor Energy Inc. fell 11.4%.
Financials stocks also fell. Royal Bank of Canada among the most actively traded on the broader market, declined 1.7%. Manulife Financial Corp. (CA:MFC: news , chart , profile ) pulled back by 0.9% and Bank of Nova Scotia (CA:BNS: news , chart , profile ) fell 0.5%.
Financial stocks briefly bounced higher at the open after China's central bank, for the fifth time since September, cut its key lending and deposit rates. The cut by 0.27 percentage points is part of the country's efforts to bolster the economy.
The Bank of Japan and the U.S. Federal Reserve cut their rates last week. The Bank of Canada earlier this month cut its lending rate by three-quarters of a percentage point, to 1.5%.
