TSX, WALL STREET FALL ON GREECE DEBT FEARS

TORONTO • North American markets closed lower, unable to build on Friday’s rally as concerns about Greece’s debt problems bubbled to the surface.

The S&P/TSX composite index closed down 17.38 points at 15,152.64 on Monday as oil prices drifted lower, while the Canadian dollar fell 0.13 of a U.S. cent to 82.58 cents.

In New York, markets failed to extend Friday’s advance, which stemmed from a solid jobs report out of the U.S.

The Dow Jones industrial average, which bounded ahead 267 points Friday in its biggest advance since early February, was 85.94 points lower at 18,105.17. The S&P 500, which posted a solid 28-point advance on Friday, also declined, down 10.77 points at 2,105.33, while the tech-heavy Nasdaq fell 9.98 points to 4,993.57.

Craig Fehr, Canadian markets strategist at Edward Jones in St. Louis, says focus has shifted to Greece, which is due to repay a 750-million-euro loan to the International Monetary Fund on Tuesday.

“As Greece and eurozone debt pops back into the forefront, it takes investors back to 2011 and the tremendous amount of volatility and the pullbacks we saw in global equity markets,” said Fehr.

“I think to some degree, as long as the headlines are being dominated by Greek debt concerns, we’re going to see some hesitation, some nervousness, across the markets. I don’t think it plays a long-term role in where we see equity markets go from here, but certainly in the short term, it’s going to have a meaningful impact on market fluctuations.”

The declines came despite a rate cut by China’s central bank in a move aimed at stimulating the world’s second-biggest economy.

The weekend decision by the People’s Bank of China to reduce its benchmark rate a quarter point to 5.10 per cent was the third such cut in the last six months in an attempt to stimulate a slowing economy in the Asian powerhouse. Growth in China, a major consumer of oil and metals, tends to benefit the commodities-heavy Toronto stock market.

“The markets have come to expect more stimulus out of China, so we’re not getting an overly large reaction from the markets today based on that, and I think that’s because some of this has already been baked in,” said Fehr.

“The broader implication here is that the Chinese economy continues to slow and continues to grapple with slower manufacturing activity, overheated property markets and slower lending growth. As a result, policy-makers are looking for new ways to try to jump-start that economy, so I wouldn’t expect this to be the last bit of news as it relates to monetary policy stimulus from China.”

On the commodity markets, the June crude contract lost 14 cents to US$59.25 a barrel and the June gold contract fell $5.90 to US$1,183.20 an ounce.