Canadian stocks, loonie drop on Italy concerns

RIM shares sink to lowest closing level since 2004

 SAN FRANCISCO (MarketWatch) — Canadian stocks fell sharply Wednesday as global markets swooned on Italian debt fears.

Yields on Italian 10-year government bonds soared as high as 7.44%, sparking fears that the European Union’s third-largest economy could require a bailout. Italian yields, having breached the key 7% “bailout barrier” are “within striking distance of bailed-out Ireland at 7.87%,” wrote Colin Cieszynski, CMC Markets analyst, in a note. 

Investors had shown optimism Tuesday on reports that Prime Minister Silvio Berlusconi had agreed to step down pending the approval of Italy’s 2012 budget.

The benchmark S&P/TSX Composite Index CA:$ISPTX -2.66%  dropped 332.63 points, or 2.7%, to finish at 12,156.22, derailing a two-day winning streak. It was the index’s biggest one-day percentage loss since Oct. 3. 

“The European sovereign-debt problem just doesn’t want to go away,” said John Kinsey, portfolio manager at Caldwell Securities in Toronto. “Yesterday investors kind of thought the Italians had it under control, and today they changed their mind.”

The volatility drove up demand for the safe-haven U.S. dollar, pushing the Canadian dollar to depreciate 1.4% against its U.S. counterpart USDCAD +0.06% , hitting its weakest intraday level in more than two weeks. One U.S. dollar recently bought C$1.0231, versus C$1.0086 late Tuesday. 

All sectors were broadly in negative territory, led by a 7.8% drop in the metals and mining sector. 

Base-metals stocks led metals and mining declines, as copper prices settled 2.6% lower. Shares of First Quantum Minerals Ltd. CA:FM -14.05%  plunged 14.1% after the copper and gold miner lowered its full-year production outlook in its earnings release late Tuesday. 

Gold-mining stocks also closed the session lower after rallying earlier, with shares of Kinross Gold Corp. CA:K -2.31%  down 2.3%. 

Gold futures posted their first loss in three sessions Wednesday as the U.S. dollar rose. Gold for December delivery GC1Z -1.10%  dipped $7.60, or 0.4%, to settle at $1,791.60 an ounce on the New York Mercantile Exchange. A strong dollar puts pressure on commodities because it makes them more expensive for the holders of other currencies.

 

Energy stocks also fell, as shares of heavyweight Suncor Energy Inc. CA:SU -5.56%   SU -6.75%  lost 5.6% and Talisman Energy Inc. CA:TLM -6.08%  dropped 6.1%. 

Among other notable decliners, Toronto-listed shares of Research In Motion Ltd. CA:RIM -3.11%   RIMM -0.11%  fell for a third straight session. Google Inc. GOOG -1.86%  announced Wednesday that it would stop supporting its Gmail application for BlackBerry users. 

RIM shares dropped 59 cents, or 3.1%, to settle at $18.41 a share. This was the lowest closing price for RIM shares since December 2004. 

Source; http://www.marketwatch.com/story/tsx-drops-on-italy-concerns-gold-miners-rally-2011-11-09-1322420