Canada's main stock index fell on Friday, diverging from rising US equities, as fears about Chinese economic growth hit commodity issues, while weak jobs data prompted investors to take a cautious stance heading into the weekend. Financial and energy issues led the drop, but the weakness was broad with all but one subgroup of the benchmark TSX index retreating on the day.
"There's a little bit of speculation out there that the Bank of China rate cut (on Thursday) was a precursor to what could be weaker-than-expected economic data that they're going to report," said Craig Fehr, a Canadian market strategy at Edward Jones Canada's employment report for May on Friday only narrowly missed market estimates with a tepid 7,700 jobs gain, but the data did little to ease investor nervousness about both global growth and the deepening debt crisis in Europe.
Concerns about Chinese demand and the continuing euro zone jitters ate into oil prices, pulling the heavily-weighted TSX energy index down 1.4 percent. Base metals prices also fell. Among oil companies, Nexen Inc dropped 2.0 percent to C$16.39, while Husky Energy retreated 1.4 percent to C$23.83. Copper miner Inmet Mining led base metals miners lower, dropping 4.0 percent to C$43.41, but the index's materials sector ended the session up 0.1 percent as gold-mining stocks were boosted by a late-session rally in the precious metal.
Kinross Gold rose 2.5 percent to C$8.51, while Iamgold Corp gained 1.4 percent to C$12.44. The financial sector slid 1.3 percent following three straight gaining sessions, led down by Bank of Montreal, which fell 1.9 percent to C$54.02. All told, the S&P/TSX composite index fell 91.49 points, or 0.79 percent, to finish at 11,500.63. Adding to the pall caused by the jobs data, Canadian housing starts slowed in May to 211,400 at a seasonally adjusted annualised rate, down from 243,800 in April.
For the week, the TSX index rose 1.2 percent despite a sharp drop on Monday, when it touched an eight-month low. Analysts said developments in Europe will likely outweigh domestic news in near-term market movements. "Investor are still very much on the fence, still waiting for clues as to what might happen in the rest of the world," said Elvis Picardo, an strategist at Global Securities in Vancouver.
Spain is expected to request European aid for its ailing banks over the weekend to forestall worsening market turmoil, becoming the fourth and biggest country to seek assistance since the euro zone's debt crisis began. Optimism over Spain's move helped drive US markets higher on Friday. Among individual Canadian stocks, shares of Genivar Inc tumbled 4.7 percent to C$23.87 after the engineering firm received a green light to acquire British consulting firm WSP Group Plc in a cash deal valued at about C$442 million ($431.5 million).