Equities dropped Monday but the price of gold soared as investors, worried about the prospect of debt crises in Europe and the United States, sought a safe haven.
Most major world markets posted a loss Monday following the release Friday of the disappointing results of stress tests performed on European banks. Shares in European banks dropped below their book value Monday for the first time since the height of the recent recession.
"The whole debt thing, both on the U.S. side and the euro side, maybe that reality is just starting to hit home," Jennifer Radman, a money manager at Caldwell Investment Management Ltd., suggested to Bloomberg to explain the falling markets.
The price of gold hit a record high, rising US$12.30 to US$1,602.40 an ounce in New York.
Gold issues helped moderate losses on the Toronto Stock Exchange Monday, with the materials sector gaining 1.2%.
The benchmark S&P/TSX composite index fell 45.40 points, or 0.34%, to 13,254.14, as seven of its sub-indexes declined, led by a 1.3% drop in financials.
The price of West Texas Intermediate crude oil fell US$1.31 to US$95.93 a barrel, and its European counterpart, Brent crude, slipped US$1.15 to US$116.11 a barrel.
The Canadian dollar erased some of its earlier losses in late-day trading, closing with a loss of 50 basis points at US$1.0429.
"The driver continues to be Europe, we're seeing equities are down, oil is down and the loonie is correlated to those things quite heavily," Rahim Madhavji, president of Knightsbridge Foreign Exchange in Toronto, told Bloomberg.
Toronto's junior Venture exchange edged downward by 2.88 points, or 0.14%, to 2,004.50.
In the United States, the Dow Jones industrial average also pared some of its earlier losses to close at 12,385.16, a decline of 94.57 points, or 0.76%. The Nasdaq composite fell 24.69 points, or 0.89%, to 2,765.11.
All of Canada's major banks lost ground on Monday, led by Bank of Nova Scotia, which fell 1.8% to $56, followed by Royal Bank of Canada, down 1.1% to $52.45, and Toronto-Dominion Bank, which fell 1.2% to $78.28. Manulife Financial slipped 2.6% to $15.57 after announcing an agreement to sell its life reinsurance business to Pacific Life Insurance Co. in a deal that will give it a $275-million after-tax gain.
Goldcorp Inc. led the few advancers, rising 2.3% to $52.79, followed by Barrick Gold Corp., up 2% to $47.03. Kinross Gold Corp. gold rose 2.4% to $16.96.
With the slide in the price of crude oil, energy giant Suncor Energy Inc. fell 1.2% to $37.55, while Canadian Natural Resources Inc. dropped 0.7% to $39.49.
