TSX closes down slightly on gold, metals weakness

TORONTO - The Toronto stock market snapped a five-session winning streak Thursday, pulled lower by a sharp drop in base metal and gold stocks.

"We have some profit taking," said Fred Ketchen, manager of equity trading at Scotia Capital. "This market is in a state where it needs to be relaxed for a bit."

The S&P/TSX composite index lost 27.37 points to 11,528.23 near the end of a strong trading week in which optimism about economic recovery had sent the main TSX index running ahead to its highest close in almost a year on Wednesday.

"I think it is probably justified, I think there is growing enthusiasm because there's growing confidence," added Ketchen.

The TSX base metals sector fell 3.98 per cent as the December copper contract declined 4.05 cents to $2.896 a pound. Teck Resources (TSX:TCK.B) lost 61 cents to $29.39 and 1st Quantum Minerals lost $6.10 to $64.25.

The gold sector was also a major decliner, down 2.25 per cent as December gold on the New York Mercantile Exchange gave back $6.70 to US$1013.50 an ounce. Goldcorp Inc. (TSX:G) lost 54 cents to $44.97.

The TSX Venture Exchange declined 11.8 points to 1,272.74.

Stock markets in Canada and the United States are up smartly this week after Federal Reserve chairman Ben Bernanke said that the U.S. recession was likely over and a report on Wednesday showed industrial activity surged 0.8 per cent in August, better than the 0.6 per cent increase economists had forecast.

The Canadian dollar closed 0.17 of a cent lower to 93.74 cents U.S. after a report showing that consumer prices in Canada declined in August for the third consecutive month and other data indicating a Canadian economic recovery is on the way.

Statistics Canada reported that the annual rate of inflation was negative 0.8 per cent last month, as the relatively low cost of gasoline and energy continued to drag the consumer price index down.

That compared with the July reading of minus 0.9 per cent, which was Canada's lowest inflation rate in 56 years.

The agency also said that its composite leading index, designed to indicate where the economy is headed in the next six to 12 months, rose 1.1 per cent in August, the biggest jump since April 2002.

The agency said jumps of one per cent or more in the index usually come early in a recovery that follows a downturn.

The TSX energy sector was down 0.4 per cent with the October crude contract on the Nymex down four cents at US$72.47 a barrel. Crude oil had surged about US$4 a barrel over the last three sessions amid signs the U.S. economy, the world's largest consumer of crude, has stopped shrinking. In turn, the rise has sent the TSX energy sector up well over three per cent this week.

New York markets were little changed amid some earnings disappointments and positive economic data.

The Dow Jones industrial average was down 7.79 points to 9,783.92.

The Nasdaq composite index fell 6.4 points to 2,126.75 while the S&P 500 index was off 3.27 points to 1,065.49 as the U.S. Commerce Department said that construction of new homes and apartments rose 1.5 per cent to an annual rate of 598,000 units last month, slightly lower than the 600,000-unit pace that economists had forecast. But it was still the highest level in nine months.

There was also an indication that job cuts are slowing as the U.S. Labour Department said that the number of newly laid-off workers seeking unemployment benefits fell last week to the lowest level since early July.

Earnings news wasn't quite so positive as FedEx said its first-quarter earnings fell 53 per cent to US$181 million and warned its profit will remain weak through the end of the year.

Revenue fell 20 per cent to about US$8 billion and its shares lost $1.74 to US$76.46.

The TSX financial sector was the best performing sector, up 0.45 per cent. Manulife Financial Corp. (TSX:MFC) shares rose 50 cents to $22.15 as it said it is buying fund manager Markland Street Asset Management Inc. Manulife said the deal allows it to expand its presence in the retail structured products area. Markland had assets under management of approximately $114 million at the end of August.

Sun Life Financial Inc. (TSX:SLF) shares ticked 31 cents higher to $31.62 after the life insurer reassured investors on Thursday that it won't slash dividend payments in the near future. During the second quarter, Manulife cut its quarterly dividend in half despite a 76 per cent surge in profits during the second quarter.

Elsewhere in the resource sectors, shares in Opti Canada Ltd. (TSX:OPC) were unchanged at $2.25 on heavy volume of 20.7 million shares after going as high as $2.57, in a second volatile day of trading.

Copper Mountain Mining Corp. (TSX:CUM) shares jumped after the company called an unsolicited takeover offer from Taseko Mines Ltd. (TSX:TKO) "untimely" and said it undervalues the company's growth potential and jeopardizes its current plans. Copper Mountain shares jumped 24 cents or 17 per cent to C$1.65 while Taseko Mines added one cent to $2.93.

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The Toronto stock market snapped a five-session winning streak Thursday, pulled lower by a sharp drop in base metal and gold stocks.

"We have some profit taking," said Fred Ketchen, manager of equity trading at Scotia Capital. "This market is in a state where it needs to be relaxed for a bit."

The S&P/TSX composite index lost 27.37 points to 11,528.23 near the end of a strong trading week in which optimism about economic recovery had sent the main TSX index running ahead to its highest close in almost a year on Wednesday.

"I think it is probably justified, I think there is growing enthusiasm because there's growing confidence," added Ketchen.

The TSX base metals sector fell 3.98 per cent as the December copper contract declined 4.05 cents to $2.896 a pound. Teck Resources (TSX:TCK.B) lost 61 cents to $29.39 and 1st Quantum Minerals lost $6.10 to $64.25.

The gold sector was also a major decliner, down 2.25 per cent as December gold on the New York Mercantile Exchange gave back $6.70 to US$1013.50 an ounce. Goldcorp Inc. (TSX:G) lost 54 cents to $44.97.

The TSX Venture Exchange declined 11.8 points to 1,272.74.

Stock markets in Canada and the United States are up smartly this week after Federal Reserve chairman Ben Bernanke said that the U.S. recession was likely over and a report on Wednesday showed industrial activity surged 0.8 per cent in August, better than the 0.6 per cent increase economists had forecast.

The Canadian dollar closed 0.17 of a cent lower to 93.74 cents U.S. after a report showing that consumer prices in Canada declined in August for the third consecutive month and other data indicating a Canadian economic recovery is on the way.

Statistics Canada reported that the annual rate of inflation was negative 0.8 per cent last month, as the relatively low cost of gasoline and energy continued to drag the consumer price index down.

That compared with the July reading of minus 0.9 per cent, which was Canada's lowest inflation rate in 56 years.

The agency also said that its composite leading index, designed to indicate where the economy is headed in the next six to 12 months, rose 1.1 per cent in August, the biggest jump since April 2002.

The agency said jumps of one per cent or more in the index usually come early in a recovery that follows a downturn.

The TSX energy sector was down 0.4 per cent with the October crude contract on the Nymex down four cents at US$72.47 a barrel. Crude oil had surged about US$4 a barrel over the last three sessions amid signs the U.S. economy, the world's largest consumer of crude, has stopped shrinking. In turn, the rise has sent the TSX energy sector up well over three per cent this week.

New York markets were little changed amid some earnings disappointments and positive economic data.

The Dow Jones industrial average was down 7.79 points to 9,783.92.

The Nasdaq composite index fell 6.4 points to 2,126.75 while the S&P 500 index was off 3.27 points to 1,065.49 as the U.S. Commerce Department said that construction of new homes and apartments rose 1.5 per cent to an annual rate of 598,000 units last month, slightly lower than the 600,000-unit pace that economists had forecast. But it was still the highest level in nine months.

There was also an indication that job cuts are slowing as the U.S. Labour Department said that the number of newly laid-off workers seeking unemployment benefits fell last week to the lowest level since early July.

Earnings news wasn't quite so positive as FedEx said its first-quarter earnings fell 53 per cent to US$181 million and warned its profit will remain weak through the end of the year.

Revenue fell 20 per cent to about US$8 billion and its shares lost $1.74 to US$76.46.

The TSX financial sector was the best performing sector, up 0.45 per cent. Manulife Financial Corp. (TSX:MFC) shares rose 50 cents to $22.15 as it said it is buying fund manager Markland Street Asset Management Inc. Manulife said the deal allows it to expand its presence in the retail structured products area. Markland had assets under management of approximately $114 million at the end of August.

Sun Life Financial Inc. (TSX:SLF) shares ticked 31 cents higher to $31.62 after the life insurer reassured investors on Thursday that it won't slash dividend payments in the near future. During the second quarter, Manulife cut its quarterly dividend in half despite a 76 per cent surge in profits during the second quarter.

Elsewhere in the resource sectors, shares in Opti Canada Ltd. (TSX:OPC) were unchanged at $2.25 on heavy volume of 20.7 million shares after going as high as $2.57, in a second volatile day of trading.

Copper Mountain Mining Corp. (TSX:CUM) shares jumped after the company called an unsolicited takeover offer from Taseko Mines Ltd. (TSX:TKO) "untimely" and said it undervalues the company's growth potential and jeopardizes its current plans. Copper Mountain shares jumped 24 cents or 17 per cent to C$1.65 while Taseko Mines added one cent to $2.93.