Canadian stock market dips over gold, energy drop

Canada's main stock lost ground on Tuesday over a sharp drop in gold shares and investors' speculation about the coming interest rate announcement.

Toronto Stock Exchange's benchmark S&P/TSX Composite Index was down 6.65 points, or 0.04 percent, to 15,619.08 points, with the gains driven by financial and info-tech shares overpowered by a sharp drop in resources stocks.

The index plummeted 111.89 points to start out Tuesday's session, and the market was closed Monday due to Labor Day.

Although the financial sector and info-tech sector rose 0.43 percent and 1.53 percent respectively, the market sentiment was weighed as gold and energy shares sharply dropped.

S&P/TSX Global Gold Index, an important indicator of global gold capital market, plunged 2.85 percent, over a sharp drop in gold futures. The most active gold contract for December delivery lost 22.4 U.S. dollars, or 1.74 percent, to settle at 1,265 U.S. dollars per ounce on the COMEX division of the New York Mercantile Exchange fell on Tuesday, as data showed U.S. manufacturing expanded in August at its strongest pace in more than three years.

Most of gold shares tumbled when Goldcorp Inc. dropped 4.23 percent to 29.24 Canadian dollars (about 26.22 U.S. dollars); Barrick Gold Corp. decreased 2.35 percent to 19.52 Canadian dollars and Eldorado Gold Corp. lost 4 percent to 8.63 Canadian dollars.

The energy share declined 1.85 percent with Suncor Energy Inc. down 2.15 percent to 43.67 Canadian dollars and Canadian Natural Resources Ltd. fell 2.57 percent to 46.17 Canadian dollars.

And investors will seek new guidance from the Canadian central bank's interest rate announcement on Wednesday.

"While the data last Friday did show exports picking up, (but) the business still appear to be quite cautious with their outlays, which points to another fairly dovish statement, with the central bank continuing to suggest a rate cut is as likely as an increase, " said Peter Buchanan, senior economist with the Canadian Imperial Bank of Commerce.

On the currency front, the Canadian dollar Tuesday closed lower at 0.9149 U.S. dollar, compared with 0.9197 U.S. dollar last Friday.

Peter Buchanan told Xinhua that "Bank of Canada Governor Stephen Poloz would still like the Canadian dollar to ease a bit further in our view, to make Canada an attractive destination for foreign investment." Enditem