TORONTO: Canada's main stock index dropped in volatile trading on Wednesday as political turmoil in Portugal and Egypt coupled with sluggish data out of China to stoke investor worries about the global economic recovery.
Higher bullion prices pushed up gold stocks and crude oil prices shot up on Middle East tensions, but failed to provide much support to energy shares, which edged higher.
Investors had much to process on Wednesday as Egypt's armed forces overthrew elected President Mohamed Mursi and announced a political transition with the support of a wide range of leaders.
Meanwhile, political turmoil in Portugal drove Lisbon's bourse to its worst day in three years and threatened to reignite the euro zone crisis.
Also on Wednesday, data showed China's services sector expanded only modestly in June with the vast construction industry acting as a drag on growth, a further sign that the world's second-largest economy is losing momentum.
The resources-heavy Canadian market's dependence on the global economy because of the commodities it exports makes it vulnerable to any such bumps on the road.
"It's a combination of geopolitical and macroeconomic uncertainty," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver. "That is weighing on the TSX because the index is a proxy for global growth."
The market is also awaiting the influential US nonfarm payrolls report on Friday.
"The US jobs numbers have been quite pivotal in determining market direction," Picardo said, adding investors would like the jobs numbers to "hit the sweet spot."
The jobs numbers should not be "too low to raise concerns about a potential slowdown in the United States," or "too strong to cause more fear about the Fed tapering the quantitative easing program."
In Europe, Portuguese 10-year bond yields topped 8 percent and its stock market sank after the country's president summoned main political parties for crisis talks over the government's future. The market fears a snap election could derail Lisbon's exit from an international bailout.
But Lorne Steinberg, president of Lorne Steinberg Wealth Management in Montréal, said investors should look past the current crisis.
"Portugal is not Greece. This is just a blip on the screen ... Europe is past the worst," he said. "In three to four years, Europe will be back to some kind of sluggish growth."
The Toronto Stock Exchange's S&P/TSX composite index closed down 32.70 points, or 0.27 percent, at 12,145.68.
Eight of the 10 main sectors on the index were in the red.
Financials, the index's most heavily weighted sector, were down 0.4 percent. Royal Bank of Canada, the country's biggest lender, fell 0.6 percent to C$60.55 and played the biggest role of any single stock in leading the market lower. Toronto-Dominion Bank lost 0.3 percent to C$84.51.
Shares of telecommunications providers dropped 1.3 percent, with Rogers Communications Inc down 2 percent at C$41.52.
The materials sector, which includes mining stocks, advanced 1.1 percent. Shares of gold producers jumped 1.3 percent as the price of bullion climbed.
Barrick Gold Corp added 1.2 percent to C$15.51, and Goldcorp Inc gained 2.7 percent to C$26.02.
Shares of energy companies were up 0.2 percent. Canadian Natural Resources Ltd climbed 2.3 percent to C$30.99 and had the biggest positive influence on the market.
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