TSX Ends Lower On Eurozone, Middle East Worries - Canadian Commentary

(RTTNews) - Canadian stocks snapped a three-day gain to end lower Wednesday, on some soft macroeconomic data out of China and concerns over the debt crisis resurfacing in Europe. Investors also weighed the increasing tension in the eurozone with Portuguese and Greek bond yields rising amid the political tensions in the Middle East.

Portugal's borrowing costs surged on Wednesday following the resignation of ministers from Prime Minister Pedro Passos Coelho's coalition government, with risks of an early election even as the country struggles to keep austerity measures on track. The yield on Portugal's benchmark 10-year bonds exceeded 8 percent early today, the highest since November, underlining the additional return that investors seek to take risk.

In Egypt, the army removed Mohammed Morsi as president of the country after he failed to respond to an ultimatum given by the military to settle issues with the opposition. The army chief has suspended the constitution and named the Chief Justice of Egypt as the interim president, while promising early elections in the country.

Meanwhile, economic activity in the U.S. service sector expanded in June, although the pace of growth unexpectedly slowed compared to a month ago, a report from the Institute for Supply Management showed. Nevertheless, in an upbeat sign for the labor market, first-time claims for U.S. unemployment benefits registered a modest decrease for the week ended June 29. Meanwhile, employment in the U.S. private sector rose more than anticipated in June, a report from payroll processor Automatic Data Processing, Inc. (ADP) showed Wednesday.

The S&P/TSX Composite Index closed Wednesday at 12,145.68, down 32.70 points or 0.27 percent. The index touched an intraday high of 12,179.07 and a low of 12,055.63. The main index added over 200 points or nearly 2 percent in the previous three sessions.

The Global Gold Index climbed 1.26 percent, with gold futures for August delivery gaining $8.50 or 0.7 percent to close at $1,251.90 an ounce Wednesday on the Nymex.

Among gold stocks, Yamana Gold Inc. (YRI.TO) gained 2.22 percent, while Goldcorp Inc. (G.TO) added 2.68 percent. IAMGOLD Corp. (IMG.TO) slipped 0.94 percent, while Barrick Gold Corp. (ABX.TO) gathered 1.24 percent. Kinross Gold Corp. (K.TO) added 1.93 percent, while B2Gold Corp. (BTO.TO) gained 1.74 percent.

The Capped Materials Index added 1.05 percent, with Potash Corporation of Saskatchewan Inc.(POT.TO) down 0.70 percent.

The Diversified Metals & Mining Index gained 0.33 percent, with First Quantum Minerals Ltd. (FM.TO) inching up 0.06 percent and Teck Resources Limited (TCK.B.TO) added 1.25 percent. Lundin Mining Corp. (LUN.TO) gained 1.02 percent, while Osisko Mining Corp. (OSK.TO) moved up 1.73 percent.

Latest data from the EIA revealed that US crude oil inventories dived 10.30 million barrels and gasoline stocks shed 1.70 million barrels in the weekended June 28. Analysts expected crude oil inventories to dip only by 3 million barrels last week. Crude for August gained $1.78 to $101.38 a barrel.

The Energy Index gathered 0.21 percent, with U.S. crude oil futures for July delivery jumping $1.64 or 1.6 percent to close at $101.24 a barrel Wednesday on the Nymex.

Among energy stocks, Suncor Energy Inc. (SU.TO) eased 0.13 percent, while Enbridge Inc. (ENB.TO) shed 0.72 percent. Talisman Energy Inc. (TLM.TO) dropped 0.82 percent, while Encana Corp. (ECA.TO) tanked 0.45 percent. Canadian Natural Resources Limited (CNQ.TO) added 2.34 percent.

The Financial Index slipped 0.39 percent with Manulife Financial Corporation (MFC.TO) up 0.06 percent, Bank of Nova Scotia (BNS.TO) down 0.71 percent, and Bank of Montreal (BMO.TO) down 0.34 percent. Royal Bank of Canada (RY.TO) shed 0.62 percent.

The Information Technology Index shed 0.20 percent, with BlackBerry (BB.TO) down 0.49 percent.

The Capped Industrials Index eased 0.74 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) ending flat at $4.70.

Communications services provider Sandvine Corp. (SVC.TO) lost 7.58 percent after reporting a second-quarter profit of $892 million, compared to a loss of $4.17 million a year ago. On a per share basis, earnings were $0.006, compared to a loss of $0.030 last year.

Fitch Ratings on Tuesday affirmed the ratings of Sun Life Financial Inc. (SLF.TO) including all outstanding issues, as well as the Insurer Financial Strength ratings of SLF's primary Canadian insurance subsidiaries at 'AA-'. The Rating Outlook is Negative. The stock gained 0.32 percent.

In economic news, Statistics Canada said the nation's trade deficit with rest of the world decreased from $951 million in April to $303 million in May as merchandise imports fell 3.2 percent and exports declined 1.6 percent.

In economic news from the U.S., the ADP said private sector employment increased by 188,000 jobs in June following a downwardly revised increase of 134,000 jobs in May. Economists had expected the private sector to add about 165,000 jobs compared to the addition of 135,000 jobs originally reported for the previous month.

A report from the U.S. Labor Department revealed that initial jobless claims dipped to 343,000, a decrease of 5,000 from the previous week's revised figure of 348,000. Economists expected jobless claims to edge down to 345,000 from the 346,000 originally reported for the previous week.

Economic activity in the U.S. service sector continued to expand in June, a report from the Institute for Supply Management showed Wednesday, although the pace of growth unexpectedly slowed compared to the previous month. The ISM non-manufacturing index dropped to 52.2 in June from 53.7 in May, with a reading above 50 indicating growth in the service sector. Economists expected the index at 54.5. With the unexpected decrease, the index is at its lowest level since hitting 51.7 in February of 2010.

Meanwhile, the U.S. Commerce Department said the trade deficit widened to $45.0 billion in May from a revised $40.1 billion in April. Economists expected the deficit to widen to $40.8 billion.

Elsewhere, eurozone private sector contraction eased in June, amid slower declines in employment and new orders, final results of a survey by Markit Economics showed. The composite output index, that measures both manufacturing and service sector activities, rose to 48.7 in June from 4.7.7 in May. The score was a tad below the flash estimate of 48.9, indicating a contraction steeper than estimated.

Meanwhile, retail sales in the euro area returned to growth in May after falling for three months in a row, and the rate of growth far exceeded economists' expectations, latest data showed. Retail sales increased 1 percent on a monthly basis in May, recovering from April's upwardly revised 0.2 percent decrease, statistical office Eurostat said. Economists had forecast sales to record a 0.3 percent growth following April's originally reported 0.5 percent contraction.

The German service sector returned to growth in June after shrinking in the previous two months, but the rate of growth was slower than initially estimated, final data from Markit Economics and BME showed. The seasonally adjusted purchasing managers' index for the service sector rose to a three-month high of 50.4 in June from 49.7 in May, moving above the no-change 50 mark - which separates growth from contraction - for the second successive month. The revised score was, however, notably lower than 51.3 estimated earlier.