MARKETS PLUNGE AS CHINA GROWTH COOLS.
Stocks pulled back Friday after two days of gains as investor confidence in the global economy was shaken by news that Chinese growth eased to the slowest pace in nearly three years.
The Canadian market was also rattled by news that the RCMP were searching the Montreal offices of Quebec business icon
Snc-lavalin Group Inc.
The S&P/TSX composite index ended the session down 174.26 points, or 1.43%, to 12,040.39.
It was the seventh weekly decline for the benchmark index, during which it has shed 5.4% of its value.
“Markets have been trending lower through the day, confirming that yesterday’s rally was a dead-cat bounce and that current downtrends remain intact,” said CMC Markets analyst Colin Cieszynski.
“U.S. consumer prices came in at 2.7% year over year, well above the 2% cutoff the Fed has suggested before it would consider further easing. This has caused yesterday’s wishful speculation for QE3 off the weak jobless claims number to be quickly unwound.”
Declines were broadly based after China posted first-quarter growth of 8.1%, compared with 8.9% in the previous three months.
Investors were also on edge this week as Europe’s sovereign debt crisis resurfaced in the form of rising bond yields in Spain and Italy, suggesting concerns about those country’s abilities to pay their debts.
Materials, energy and financials — the pillars of the Canadian market — were all hit hard.
The materials sub-index lost 1.4% as gold prices fell US$20.40 to US$1,659.10 and copper fell almost 10% to US$3.62 a pound.
Barrick Gold Corp. lost 1.2% to $41.49. Energy issues lost 1.8% as U.S. crude oil fell US81¢ to US$102.83, while financials lost 1.6%. The most influential decliners were Toronto-dominion Bank, down 1.9% to $81.95, and Royal Bank of Canada, down 1.7% to $55.88.
Shares in Snc-lavalin — beset by a financial scandal relating to its contracts in Libya under the regime of the late leader Moammar Gadhafi — fell 4.2% to $38.40 on news that RCMP officers were searching the engineering company’s office.
The Canadian dollar fell US0.39¢ to US$1.0016.
European stocks did not escape Friday’s selloff, with London’s FTSE falling 1.03%, the Paris CAC shedding 2.5% and Germany’s DAX losing 2.4%.
The Dow Jones industrial average fell 1.05%, or 136.99 points, to 12,849.59, while the Nasdaq composite index shed 1.45%, or 44.22 points, to 3,011.33.