TSX slightly lower amid Greek political turmoil, worries of economic slowdown

TORONTO – The Toronto stock market closed slightly lower Wednesday with buying sentiment held well in check by political turmoil in Greece and worries about slowing economic conditions.

The resource-intensive S&P/TSX composite index, closed off the lowest levels of the day, shaking off early triple-digit losses to close down 29.73 points at 11,675.01. The showing extended losses to six straight days, which left the TSX more than two per cent below where it started 2012. The TSX Venture Exchange gained 7.32 points to 1,345.69.

The Canadian dollar closed below parity with the U.S. currency for the first time since Mar. 6 as traders continued to avoid riskier assets such as oil and metals and resource-based currencies like the loonie. But the currency closed above the worst levels of the session, down 0.26 of a cent to 99.91 cents US.

New York’s Dow Jones industrial average fell 97.03 points to 12,835.06.

The Nasdaq composite index dropped 11.56 points to 2,934.71 and the S&P 500 index lost 9.14 points to 1,354.58.

Greece has weighed on markets since inconclusive elections Sunday failed to produce a party that could form a government.

After the conservative New Democracy failed to muster enough support to form a government, the mandate has passed onto Syriza, a left-wing party that came a surprise second in the election.

Its leader, Alexis Tsipras, said Tuesday that Greece was no longer bound by its promises to cut spending sharply. But failure to keep those promises could see international lenders cut off rescue funding, which would likely lead Greece to default and exit the euro common currency. It would also send shock waves through the eurozone banking system.

“And the reality is the whole European banking system has all this Greek debt on their books. It’s unbelievable the amount of debt that is out there,” said Jim Muir, director at Fraser Mackenzie.

Tsipras is not expected to be able to form a government and most observers think a second election will be called for June. But analysts warn that Greece could run out of money as soon as next month without a government to negotiate the next level of its bailout.

Signs of a slowing global economy have also weighed on markets in the wake of weak manufacturing data from Europe and China and a much weaker than expected U.S. employment report last Friday.

The financials sector was the biggest drag, down 0.83 per cent as Royal Bank (TSX:RY) lost 72 cents to $53.37 and TD Bank (TSX:TD) gave back 81 cents to $79.61.

Railway stocks also lost more ground, with Canadian National Railways (TSX:CNR) down $1.38 to $80.82.

Canadian Pacific Railway (TSX:CP) was off 44 cents at $73.25 as an attempt by New York investment firm Pershing Square Capital Management to have its nominees join CP’s board of directors and replace chief executive Fred Green gained more momentum. Pershing Square said proxy advisory firm Glass, Lewis & Co. and credit rating agency Egan-Jones Ratings Co. are now backing its plan to revamp CP’s board.

The base metals component lost 0.48 per cent as metal prices also fell, with the July copper contract in New York down two cents at US$3.66 a pound. Copper, viewed as an economic bellwether because it is used in so many industries, has fallen more than five per cent this month. First Quantum Minerals (TSX:FM) gained 20 cents to C$18.19 while HudBay Minerals (TSX:HBM) fell 47 cents to $9.27.

The energy sector was off 0.22 per cent as the June crude contract on the New York Mercantile Exchange declined 20 cents to US$96.81. Suncor Energy (TSX:SU) fell 70 cents to C$29.07 while Cenovus Energy (TSX:CVE) moved up 39 cents to $32.55.

The gold sector was the major advancer, up about 1.75 per cent despite a retreat in bullion prices with the June contract down $10.30 to a 2012 low of US$1,594.20 an ounce. Barrick Gold Corp. (TSX:ABX) gained 94 cents to C$37.65 while Goldcorp Inc. (TSX:G) climbed $1.20 to C$35.60.

Kinross Gold Corp. (TSX:K) dipped eight cents to $7.67 even as it reported a first-quarter profit of US$105.7 million, down from US$250.1 million a year ago, as production slipped. Sales totalled US$1.04 billion, up from US$937 million.

On the earnings front, Tim Hortons Inc. (TSX:THI) said quarterly net income was up 10 per cent from a year ago to $88.8 million or 56 cents a share. Total revenues were up by 12.1 per cent to $721.3 million, but its shares shed $1.25 to $55.83.

In the media sector, Quebecor Inc. (TSX:QBR.B) said its first-quarter net income rose to $72.9 million, or $1.15 per share, from $34.3 million, or 53 cents per share, a year ago. Its stock was unchanged at $37.

And Torstar Corp. (TSX:TS.B) shares were off 15 cents at $9.95 as it reported net income of $29.3 million, or 37 cents per share, in the first quarter of 2012. That is up from $15.5 million, or 20 cents, in the first quarter of 2011.