Published On: Thu, Jul 2nd, 2009

TSX slides on weak oil, US jobs data

Toronto’s main stock index finished lower on Thursday as oil prices slid and a gloomy U.S. jobs report dimmed hopes for a quick economic recovery.

U.S. employers cut more jobs than expected in June and the unemployment rate rose to 9.5 percent, the highest level in 26 years. [ID:nN02549309]

“It is a disappointment for sure,” said Steve Ibel, institutional equities trader at Beacon Securities.

The glum jobs picture pressured oil CLc1 prices, which fell below $67 a barrel. [ID:nSYD481718]

The TSX index’s energy sector sank 4.12 percent and led the retreat. Suncor Energy (SU.TO) was down 6.3 percent at C$33.16, while EnCana (ECA.TO) sank 3 percent to C$55.96.

Also dampening the mood was data that showed euro zone unemployment hit its highest level in 10 years in May. [ID:nL2714438]

The S&P/TSX composite index .GSPTSE was down 129 points, or 1.24 percent, at 10,245.91, with seven of its 10 main groups lower. Earlier in the day, it fell by as much as 1.5 percent.

Cushioning the index’s fall was its mining-heavy materials sector, which was up 1.93 percent, even though metals prices were lower. Analysts said investors bid gold names in a flight to safety move.

“At times like this when the outlook for stocks looks a little uncertain you see money gravitate towards gold stocks as a proxy for increased risk in the overall market,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

Goldcorp (G.TO) was up 2.33 percent at C$41.37, and Kinross Gold (K.TO) rose 3.77 percent to C$22.

Fertilizer producer Potash Corp of Saskatchewan (POT.TO) climbed 2.4 percent to C$111.10.

The blue chip S&P/TSX 60 index .TSE60 closed 8.94 points, or 1.4 percent, lower at 621.12.

The TSX index’s drop is its second straight this week — Canadian markets were closed on Wednesday for Canada Day — and trade was expected to be thin on Friday with U.S. markets closed for the Independence Day holiday weekend.

Generally U.S. market holidays result in a decrease in trading volumes, said Bob Gorman, chief portfolio strategist at TD Waterhouse. “You’re going to have very thin trading,” he said.