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CANADA STOCKS-Strong greenback, weak miners drag TSX down

Published 12/15/2010, 04:54 PM
Updated 12/15/2010, 04:56 PM
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* TSX closes down 0.4 percent to 13,229.07

* Golds, base metals lead index down (Updates to close, adds details, quotes)

By Claire Sibonney

TORONTO, Dec 15 (Reuters) - Toronto's main stock index closed lower on Wednesday, with weighty materials issues pressured by a drop in metal prices on the back of a stronger U.S. dollar, as euro zone debt concerns returned to the forefront.

The greenback rallied against the euro after Moody's said it may downgrade Spain's debt rating and investors awaited more news on how policymakers will resolve the region's fiscal crisis. [FRX/]

Gold miners sagged 1.8 percent as bullion retreated for the first time in three days as the U.S. dollar's rally, and tamer inflation data more than offset safe-haven buying of the precious metal. [GOL/]

Among the biggest decliners on the index were Barrick Gold Corp , down 1.5 percent at C$52.75, and Agnico Eagle , off 2.7 percent at C$80.79.

Copper prices also fell, knocking base-metal miners down 1.7 percent. Teck Resources ended 2.3 percent lower at C$56.54.

The Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> closed down 51.01 points, or 0.4 percent, to 13,229.07. Five of the index's 10 main groups were weaker, including the technology sector, down 0.7 percent.

Investors taking profits going into the year end were also seen having an impact.

Shares of Research in Motion slipped 2.3 percent to C$59.48 ahead of the release of its earnings on Thursday. [ID:nN0379074]

Rising U.S. Treasury yields were another culprit weighing on sentiment and boosting the greenback, said Youssef Zohny, associate portfolio manager at Van Arbor Asset Management. [US/]

"Obviously you're seeing mortgage rates climb and you're seeing a lot of interest rates climb, almost a percent over a couple months, and it's putting a lot of pressure on the stock market," he said.

"It hasn't up to this date but now investors are starting to pay attention."

Zohny said market players are worried that this trend goes against stimulative measures taken by the U.S. Federal Reserve last month when it announced C$600 billion in Treasury bond purchases.

($1=$1 Canadian) (Reporting by Claire Sibonney; editing by Rob Wilson)

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