Toronto's main stock index ended lower for a second straight session on Friday, dropping below the 12,000 mark as weak commodity prices hit heavily weighted petroleum and metal producers. Natural gas major EnCana Corp declined 2.3 percent to C$31.37 while Suncor Energy Inc, the country's biggest oil company, retreated 2.7 percent to C$31.28.
The broader energy sector sagged 1.3 percent as US crude futures slid nearly 2 percent on a surging US dollar. An array of commodities tumbled as renewed worries about Greece's debt problems pushed the greenback higher against the euro on safe-haven buying. Most commodities are priced in US dollars.
Barrick Gold Corp was down 0.5 percent at C$40.14, while base metals miner Teck Resources fell almost 3 percent to C$40.05. The Toronto Stock Exchange's S&P/TSX composite index ended down 92.03 points, or 0.76 percent, at 11,947.98. The drop marked the TSX's second day of losses since it touched a 17-month high of 12,122.47 on Wednesday.
"We've had this big leap forward and it's a matter of pausing here until some more signals warrant a further move up," said Ian Nakamoto, director of research at McDougall, MacDougall & MacTier. "It's tough for me to see things crashing here. As long as the global economy continues to move up, China continues to move up, the US continues to show further improvement, it's hard to get negative on the Canadian equity market."
Meanwhile, stronger than forecast inflation data increased expectations the Bank of Canada will raise interest rates sooner rather than later this year. "I think that markets are now realising what the fixed income have realised for a while, and that is that in Canada interest rates are going to rise," said Carlos Leitao, chief economist at Laurentian Bank Securities in Montreal.
Higher rates are typically negative for stocks because they slow economic growth and increase borrowing costs for companies. The rate-sensitive financial sector declined slightly, with Royal Bank of Canada down 0.2 percent at C$59.40. The tech group fell 2.4 percent, with concerns over US corporate results spilling over the border as shares of Palm Inc plunged one day after it warned that quarterly revenues would be far below expectations.
BlackBerry maker Research In Motion dropped almost 2 percent to C$74.03. Eight of the TSX's 10 main sectors ended the session lower, with consumer staples and healthcare issues slightly higher. Despite the recent retreat, the index has risen 2.7 percent since the beginning of the month. "There's still some profit-taking going on. We've had quite a run. I would say in the next week or two you'll probably see some sideways trading," said Paul Gardner, partner and portfolio manager at Avenue Investment Management.