TSX Ends Lower On Weak China Data - Canadian Commentary

(RTTNews) - Canadian stocks ended lower Thursday, led by declines in the mining and financial sectors, after some weak economic data from China with its factory sector contracting for the first time in over six months. The slide was somewhat limited with gold stocks shining, led by Barrick Gold and Goldcorp., even as retail sales in Canada grew a faster pace than expected in November.

Elsewhere, most Asian markets ended lower on cues from China, even as the world's second largest economy moved towards its Lunar New Year holidays with more liquidity in the system. Most European markets also ended lower with investor focus on China.

The headline purchasing managers' index, a key indicator of China's factory sector performance, dropped to a six-month low of 49.6 in January from 50.5 in December. An index reading above 50 indicates expansion of the sector while a reading below 50 suggests contraction. The contraction was attributed to a decline in the volume of new work inflow.

Meanwhile, retail sales in Canada increased at a faster pace than expected in November with sales advancing 0.6 percent to $41 billion. Analysts expected retail sales to rise about 0.2 percent for November. The growth was led mostly by improved automobiles and gear sales due an early winter.

The S&P/TSX Composite Index closed Thursday at 13,932.97, down 55.23 points or 0.39 percent. The index scaled an intraday high of 14,002.39 and a low of 13,932.28.

Gold futures snapped a two-day loss to end sharply higher with the dollar weakening against a basket of major currencies, making it attractive for holders of foreign currencies.

The Global Gold Index jumped 3.26 percent, with gold futures for February delivery, the most actively traded contract, surging $23.70 or 1.9 percent to close at $1,262.30 an ounce Thursday on the Nymex.

Among gold stocks, Goldcorp Inc. (G.TO) added 4.14 percent, while Barrick Gold Corp. (ABX.TO) gained 2.98 percent. Yamana Gold Inc. (YRI.TO) moved up 1.04 percent, while Kinross Gold Corp. (K.TO) gathered 1.95 percent.

The Capped Materials Index moved up 1.01 percent, with fertilizer giant Potash Corp. of Saskatchewan Inc. (POT.TO) slipping 1.06 percent and Agrium, Inc. (AGU.TO) down 1.48 percent.

U.S. crude oil ended at a three-week high after an Energy Information Administration report showed distillate stockpiles to have declined more than expected last week, and the dollar weakening against some major currencies, making it attractive for buyers holding foreign currencies.

The Energy Index shed 0.39 percent, with U.S. crude oil futures for March delivery, the most actively traded contract, gaining $0.59 or 0.6 percent to close at $97.32 a barrel Thursday on the Nymex.

Among energy stocks, Canadian Natural Resources Limited (CNQ.TO) edged up 0.11 percent, while Suncor Energy Inc. (SU.TO) dropped 0.50 percent. Talisman Energy Inc. (TLM.TO) slipped 0.92 percent, while Encana Corp. (ECA.TO) added 1.04 percent.

The Information Technology Index dropped 0.97 percent, with smartphone maker BlackBerry Limited (BB.TO) slipping 3.09 percent after having jumped nearly 10 percent yesterday on news of its decision to divest the majority of its real estate holdings in Canada.

The Diversified Metals & Mining Index surrendered 1.55 percent, with Teck Resources Limited (TCK.B.TO) down 1.06 percent and First Quantum Minerals Ltd. (FM.TO) down 2.03 percent. Lundin Mining Corp. (LUN.TO) shelved 1.96 percent.

The heavyweight Financial Index dived 1.07 percent with Royal Bank of Canada (RY.TO) diving 2.41 percent and Bank of Montreal (BMO.TO) shedding 0.41 percent. The Bank of Nova Scotia (BNS.TO) surrendered 0.60 percent, while Toronto-Dominion Bank (TD.TO) slipped 0.42 percent.

The Capped Industrials Index shed 0.337 percent with Bombardier Inc. (BBD.A.TO, BBD.B.TO) adding 0.26 percent, while Air Canada (AC.B.TO) declining 1.34 percent.

In economic news, first-time claims for U.S. unemployment benefits for the week ended January 18 edged up to 326,000, an increase of 1,000 from the previous week's revised figure of 325,000. Economists expected claims at 330,000 from the 326,000 originally reported for the previous week. Nonetheless, the less volatile four-week moving average dropped to 331,500 from the previous week's revised average of 335,250, hitting its lowest level since the first week of December.

Existing home sales in the U.S. rebounded in December after seeing a sharp drop the previous month, a report from the National Association of Realtors showed Thursday. Existing home sales climbed 1.0 percent to an annual rate of 4.87 million in December after tumbling 5.9 percent to a downwardly revised 4.82 million in November. Economists expected existing home sales to edge up to 4.93 million from the 4.90 million originally reported for the previous month.

Partly reflecting improvements in the financial components, a Conference Board report on Thursday its leading economic index edged up by 0.1 percent in December following an upwardly revised 1.0 percent increase in November. Economists expected a rise of about 0.2 percent compared to the 0.8 percent advance originally reported for the previous month.

Eurozone's private sector growth accelerated more-than-expected in January, led by a further strong expansion in Germany, with both the manufacturing and service sectors recording above-trend improvement in business activity. The activity indicator for the euro area private sector climbed to 53.2 from 52.1 in December, and stayed above the no-change 50 mark for the seventh successive month. Economists expected the index to rise to 52.5.