TSX moderates loss amid record-high gold

TORONTO - The Toronto stock market moderated its earlier loss at mid-afternoon Tuesday as a record-high price of gold offset weakness in other commodities and some fresh concerns about the health of European banks.

The S&P/TSX composite index was down 35.79 points to 12,109.13 after earlier falling more than 70 points.

The gold sector helped to moderate weakness in other areas of the market, gaining 1.9 per cent as the price of gold closed at an all-time high on the New York Mercantile Exchange.

The December gold contract gained $8.20 to US$1,259.30 an ounce as jittery investors moved into the safe-haven investment. Shares in Barrick Gold Corp. (TSX:ABX) added $1.25, or 2.7 per cent, to C$48.34.

Most of the other major sectors of the TSX moved lower. The financial sector fell 0.8 per cent amid reports that Europe's major banks have more potentially risky government debt on their books than was disclosed during stress tests earlier this year.

The reports renewed worries about Europe's government debt, which had flared up earlier this year following a fiscal crisis in Greece that spread to other weak European economies, including Portugal, and helped bring stock prices down worldwide.

"It appears as though there was some weakness emanating out of Europe and concerns about the financial sector and some of the stress testing of the banks, so I think there's some spillover effect," said Gary Aitken, director of equity research at Bissett Investment Management in Calgary.

"What really comes back into play here is some of these broader issues that the market's still wrestling with, like where is this global economic growth trajectory going to settle out?"

Shares in Bank of Nova Scotia (TSX:BNS) lost 58 cents to $52.36 after the bank said it is introducing a separate global wealth management division.

The energy sector fell one per cent. The October crude contract on the New York Mercantile Exchange lost 32 cents to US$74.28 a barrel as fears about the global economy resurfaced amid worries about the health of European banks. Shares in Suncor Energy Inc. (TSX:SU) fell 46 cents to C$33.44.

The base metals sector was the biggest loser at mid-afternoon, tumbling 1.8 per cent as the December copper contract fell 2.95 cents to US$3.47 per pound.

Shares in HudBay Minerals Inc. (TSX:HBM) were down 13 cents to C$15.19.

The Canadian dollar fell 0.48 of a cent to 95.74 cents US ahead of the Bank of Canada's interest rate announcement Wednesday.

Economists believe the central bank will overlook recent disappointing economic data and continued U.S. weakness and hike the trend-setting rate a quarter point to one per cent.

The TSX Venture Exchange rose 22.41 points to 1,588.37.

On Wall Street, stock markets also moved lower. The Dow Jones industrial average fell 91.20 points to 10,356.73, while the Nasdaq composite index was down 19.27 points to 2,214.48. The S&P 500 lost 10.39 points to 1,094.12

In economic news, the European Union agreed to create new financial oversight institutions Tuesday, hoping to prevent a repeat of the government debt crisis that nearly left Greece bankrupt and brought the European banking system to its knees earlier this year. However, the finance ministers failed to agree on the introduction of a levy on banks or on a new tax on financial trading.

And the Obama administration is trying to jump-start its sputtering plan to tackle the foreclosure crisis with an effort to assist up to 1.5 million U.S. homeowners who owe more on their properties than their homes are worth.

In corporate news, shares in Alimentation Couche-Tard Inc. (TSX:ATD.B) fell 44 cents to C$23.56 after Casey's General Stores rejected the convenience store chain's latest takeover offer and said it has decided to conduct negotiations with another suitor offering US$40 in cash per share.

Private equity firm Onex Corp. (TSX:OCX) said it has agreed to acquire the remaining 75 per cent of U.S. in-home care firm ResCare that it doesn't already own for US$340 million. Shares in Onex lost 51 cents to C$28.54.

And Toronto-based miner Marathon PGM Corp. (TSX:MAR) saw its stock soar by $1.77 or 94.2 per cent to $3.65 after it agreed to be taken over by Stillwater Mining Co. (NYSE:SWC) for US$118 million.