TSX Settles Lower On China Growth Concerns - Canadian Commentary

(RTTNews) - Canadian stocks ended lower for a second straight session Wednesday, led by resource stocks as investors fretted over some weak manufacturing data out of China, notwithstanding some encouraging new home sales data from the U.S. and private sector activity expansion in the eurozone.

China's factory activity for July dropped to its lowest level in eleven months with continued slide in new orders and faster de-stocking, a survey by Markit Economics and HSBC showed. The purchasing managers' index, an indicator of the country's factory sector performance, dropped to 47.7 in July from 48.2 in June. An index reading below 50 suggests deterioration in activity.

New home sales in the U.S. rose much more than anticipated in June, a Commerce Department report showed Wednesday, which also revealing downward revisions to the data for the past few months. From the eurozone, private sector activity expanded more-than-expected to an 18-month high in July, signaling an early exit from recession in the third quarter, data from Markit Economics showed.

Asian stocks turned in a mixed performance with activity in China's vast manufacturing sector slowing in July and the Reserve Bank of India announcing fresh liquidity-tightening measures to support the falling rupee.

The S&P/TSX Composite Index closed Wednesday at 12,672.30, down 73.08 points or 0.57 percent. The index touched an intraday high of 12,766.93 and a low of 12,632.73.

The Global Gold Index plunged 4.52 percent, with gold futures for August delivery dropping $15.00 or 1.1 percent to close at $1,319.70 an ounce Wednesday on the Nymex.

Among gold stocks, Yamana Gold Inc. (YRI.TO) dived 5.21 percent, while Goldcorp Inc. (G.TO) plummeted 4.72 percent and Kinross Gold Corp. (K.TO) plunged 5.15 percent.

Gold miner Barrick Gold Corp. (ABX.TO) shed 5.41 percent after announcing that it would divest Barrick Energy Inc., as part of its portfolio optimization strategy for about C$455 million.

The Capped Materials Index shed 3.00 percent, although Potash Corporation of Saskatchewan Inc.(POT.TO) slipped 0.23 percent.

The Diversified Metals & Mining Index dropped 2.26 percent, with First Quantum Minerals Ltd. (FM.TO) down 1.38 percent and Teck Resources Limited (TCK.B.TO) surrendering 2.79 percent. Lundin Mining Corp. (LUN.TO) gave up 1.64 ercent, while Osisko Mining Corp. (OSK.TO) plunged 4.75 percent.

The Energy Information Administration's latest data showed U.S. crude oil inventories to have dipped 2.80 million barrels and gasoline stocks shed 1.40 million barrels in the week ended July 19. Analysts expected crude oil inventories to dip 2.10 million barrels and gasoline stocks to add 0.90 million barrels last week.

The Energy Index slipped 1.64 percent, with U.S. crude oil futures for September delivery shedding $1.84 or 1.7 percent to close at $105.39 a barrel Monday on the Nymex.

Among energy stocks, Suncor Energy Inc. (SU.TO) down 1.17 percent, while Enbridge Inc. (ENB.TO) slipped 0.96 percent. Canadian Natural Resources Limited (CNQ.TO) shed 1.14 percent, while Cenovus Energy Inc. (CVE.TO) shed 5.46 percent.

Integrated oil company Encana Corp. (ECA.TO) eased 1.93 percent after reporting second-quarter net earnings of $730 million, compared to a loss of $1.48 billion in the year ago quarter. Operating earnings for the quarter rose to $247 million from last year's $198 million, with Operating earnings per share improving to $0.34 from $0.27 in the prior year. Analysts expected the company to report earnings of $0.17 per share for the quarter.

The Financial Index gained 0.21 percent with Bank of Montreal (BMO.TO) up 0.66 percent, Royal Bank of Canada (RY.TO) dropped 0.23 percent, and Toronto-Dominion Bank gained 0.44 percent. Bank of Nova Scotia (BNS.TO) edged up 0.03 percent.

The Information Technology Index gained 1.58 percent, with BlackBerry Limited (BB.TO) gaining 0.11 percent.

The Capped Industrials Index shed 0.48 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) dropping 1.18 percent.

Railroad operator Canadian Pacific Railway (CP.TO) surrendered 2.10 percent after posting significantly higher second quarter net income of C$252 million or C$1.43 per share versus C$103 million or C$0.60 per share a year ago. Analysts expected earnings per share of C$1.49 for the quarter.

Financial technology solutions provider Davis + Henderson Corp. (DH.TO) gained 3.13 percent after it said that it has agreed to buy U.S.-based rival Harland Financial Solutions from parent company Harland Clarke Holdings Corp. for about $1.2 billion in cash.

Food retailer and financial services provider Loblaw Companies (L.TO) gained 3.17 percent after reporting improved second quarter net earnings of C$178 million or C$0.63 per share compared with C$156 million or C$0.55 per share during the same quarter last year. Analysts expected earnings per share of C$0.58 for the quarter.

Pharmaceutical company Transition Therapeutics Inc. (TTH.TO) jumped 12.78 percent after announcing the exclusive licensing of worldwide rights to develop and potentially commercialize novel small molecule transcriptional regulator TT-601 from Eli Lilly and Co. (LLY) for the treatment of osteoarthritis pain.

In economic news from the U.S., the Commerce Department said new home sales surged 8.3 percent to an annual rate of 497,000 in June from the revised May rate of 459,000. Economists expected new home sales to climb to an annual rate of 481,000 from the 476,000 originally reported for the previous month.

Elsewhere, eurozone private sector activity increased more than expected in July, a preliminary report from Markit Economics showed. The flash composite output index that measures business activity in both manufacturing and services sectors, rose to an 18-month high of 50.4 in July from 48.7 in June. Economists had forecast the index to rise to 49.1.

German private sector business activity rose at the fastest pace in five months in July, preliminary results of a survey by Markit Economics showed. The composite output index that measures performance of both manufacturing and services, rose to a five-month high of 52.8 in July from 50.4 in June. Readings above 50 indicates expansion in activity.