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TSX slips on EU summit doubts, Scotiabank, Perpetual Energy in focus

Published: 19:20 20 Oct 2011 BST

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Toronto's main market retracted early gains Thurday as investors remained focused on worries over the European debt crisis, ahead of a key summit this weekend. Many are doubting whether European leaders can pull together to finally agree on a concrete resolution.

In the early afternoon, the S&P TSX Composite Index edged down by 67.31 points, or 0.57%, to 11,782.19, while the more junior S&P/TSX Venture Composite fell 23.56 points, or 1.54%, to 1,502.26.

An emergency meeting between France's Nicolas Sarkozy and Germany's Angela Merkel with other international officials in Frankfurt late Wednesday fueled worries over a potential rift in the elements of a plan to finally solve the region's debt crisis, with some reports suggesting that the weekend's summit would be postponed.

However, the Associated Press reported Thursday that this Sunday's summit meeting of eurozone leaders will be followed by a second meeting no later than Wednesday.

Commodities have been swaying as a result, as a failure to resolve the crisis could lead to a Greece default, causing a crisis for the region's banks and wreaking havoc for the weak European economy, leading to lower demand for oil and metals.

The Greek parliament is to vote on more austerity cuts Thursday in a bid to secure the next round of funding from last year's bailout, with violent protests continuing in Athens for a second day.

Crude oil futures were down over 1%, or 93 cents, to $85.18 per barrel, as reports from Libyan officials said that Col. Moammar Gadhafi died from wounds sustained in an effort to seize control of his hometown of Sirte.

Gold for December delivery was down more than 2%, or $34.40, to $1,612.60 an ounce, while the silver contract bled more than 3% to $30.31 an ounce. Base metal copper futures dropped 5.74% to $3.07 per pound.

In Toronto, info tech and metals and mining posted the biggest losses, with healthcare and energy stocks following closely behind.

Gold companies were hit, with Kinross Gold (TSE:K) shedding over 1.2% and Barrick Gold (TSE:ABX) and Goldcorp (TSE:G) each dropping around 2.8% and over 2%, respectively.

Cline Mining (TSE:CMK) retreated more than 3%, while Agnico-Eagle Mines, which yesterday eported that it suspended its Goldex mine in Quebec, fell over 6% following its more than 18% plunge on Wednesday. As a result of the sharp losses, Agnico-Eagle announced today that it would double the cash portion of its previously announce takeover offer for Grayd Resource (CVE:GYD).

In the energy sector, Encana (TSE:ECA) fell more than 2% as the Canadian natural gas giant said third-quarter earnings fell 80 percent on currency charges, while Suncor Energy (TSE:SU) edged down slightly.

In corporate news, The Bank of Nova Scotia (TSE:BNS), or Scotiabank, said Thursday it has agreed to purchase just over half of Banco Colpatria in a deal valued at around US $1 billion, allowing the Canadian bank the opportunity to expand in Colombia. Scotiabank will pay US$500 million and 10.0 million common shares for the 51 percent stake.

The stock exchange listing of troubled packaged ice producer Arctic Glacier (TSE:AG.UN) is under review, the Toronto Stock Exchange said Thursday. In a statement, the main exchange gave Arctic Glacier 30 days to demonstrate that it could meet the requirements for continued listing of its 350.3 million trust units.

Eastern Platinum Limited (TSE:ELR) said on Thursday that production at its Crocodile River South African mine will be slashed by 50 percent each working day due to an ongoing strike, sending shares down.

Score Media (TSE:SCR) said that fourth-quarter revenues were up but saw a net loss of $316,000 after being hit by future income tax expense.

Natural gas producer Perpetual Energy (TSE:PMT) announced late Wednesday that it will be suspending future dividend payments until further notice given the continued weakness in natural gas prices, plummeting shares by more than 33%.

Shaw Communications (TSE:SJR.B) shares dropped as it said its fourth-quarter profit fell by 32% to $82.5 million, as losses from its terminated wireless strategy offset gains in other areas. The  cable, internet and satellite TV provider's revenue totaled $1.18 billion, up from nearly $938.9 million a year earlier.

US/Europe

In the US, markets went back and forth throughout the day, with the Dow down just below the break even point after 2:00pm EST. Financial and tech shares led the market lower, as investors remained nervous about the outcome of the Europe summit, and as they digested a host of corporate earnings reports.

On the economic front, new US jobless claims fell by 6,000 to 403,000 last week, the Labor Department said. Initial claims from two weeks ago were revised up to 409,000 from an original reading of 404,000. Economists surveyed had expected new claims to fall to 400,000 on a seasonally adjusted basis.

Existing home sales fell to an annual rate of 4.91 million in September, down from a revised 5.06 million in August, according to a report from the National Association of Realtors.

In Europe, as protests ravaged Athens for a second day, markets closed deeply in the red with the FTSE 100 in London closing down by 1.21% and the DAX in Frankfurt ending down by 2.49%.

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