Newspaper article The Canadian Press

Toronto Stock Market Closes Lower amid Worries about Spanish Bank Sector: TSX Down, Worries Mount about Spanish Banks

Newspaper article The Canadian Press

Toronto Stock Market Closes Lower amid Worries about Spanish Bank Sector: TSX Down, Worries Mount about Spanish Banks

Article excerpt

TORONTO - The Toronto stock market lost early momentum Monday to close slightly lower as worries about Spain's financial sector trumped early optimism about the prospects of Greece remaining in the eurozone monetary union.

The S&P/TSX composite index had risen as much as 59 points to add to last week's strong gain but ended the session down 10.32 points at 11,566.15 while the TSX Venture Exchange climbed 15.74 points to 1,325.01.

"I think people are still worried about what the knock-on effects are (in the eurozone)," said Chris King, portfolio manager at Morgan, Meighen and Associates.

"(And) I think we're bouncing around a trading range for awhile so we will go between very encouraging signs when the contagion risk is minimal to overblowing what the impacts could be."

The Canadian dollar benefited from higher commodities and a falling greenback, up 0.55 of a cent to 97.68 cents US.

U.S. markets are closed for the Memorial Day holiday, which typically results in subdued stock trading globally.

Polls released on the weekend favoured parties that support the tough austerity measures that have enabled Greece to receive international financial bailouts, reducing worries that Athens will exit the eurozone.

The polls' findings pushed the main stock index in Athens from a 22-month low, up 6.9 per cent.

Greece's pro-austerity New Democracy party came first in all opinion polls published. The survey results were released three weeks before Greeks return to the polls after May election results proved inconclusive but with parties opposed to the bailout terms receiving unexpectedly high support.

That has raised worries that Greece could end up exiting the eurozone. Such a move would extend financial turmoil in Greece and spread financial difficulties to other countries using the euro.

Meanwhile there were still worries about how the government debt crisis is hurting other southern European countries. The interest rate, or yield, for 10-year Spanish government bonds on the secondary market -- a key indicator of market confidence -- rose 0.16 percentage points to close at 6.45 per cent.

The spike came as Spanish lender Bankia said it needs a [euro]19 billion bailout, raising questions about how Spain intends to find the money.

At the same time, Spain's prime minister, Mariano Rajoy, insisted that the country's banking sector would not need an international rescue.

A rate of seven per cent is considered unsustainable over the long term and there is concern that Spain might soon be pushed join the ranks of Greece, Ireland and Portugal and seek an international bailout.

The industrials sector was the major decliner, down almost one per cent. Canadian Pacific Railway (TSX:CP) shares dropped $1.65 to $75.52 as the federal government introduced back-to-work legislation to end the strike by 4,800 CP workers. …

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