Greek Debt Concerns Depress Stocks, Commodities Lower as Greenback Strengthens: Stock Markets Lower amid Greek Debt Woes

By Morrison, Malcolm | The Canadian Press, February 6, 2012 | Go to article overview

Greek Debt Concerns Depress Stocks, Commodities Lower as Greenback Strengthens: Stock Markets Lower amid Greek Debt Woes


Morrison, Malcolm, The Canadian Press


TORONTO - Concerns that Greece could be heading towards bankruptcy as early as next month cast a shadow over global commodity prices and acted as a drag on the Toronto stock market Monday.

The resource-heavy S&P/TSX composite index edged 17.44 points lower to 12,559.85 while the TSX Venture Exchange was off 0.89 of a point to 1,664.22.

The Canadian dollar backed off as investors moved to the safe-haven status of U.S. Treasuries and commodity prices weakened, losing 0.19 of a cent to 100.45 cents US.

U.S. markets were negative as the Dow Jones industrial average lost 17.1 points to 12,845.13. The Nasdaq composite index fell 3.67 points to 2,901.99 while the S&P 500 index moved down 0.57 of a point to 1,344.33.

Greece needs a second bailout amounting to [euro]130 billion to avoid bankruptcy next month. But Greek party leaders have been unable to agree to the new measures, missing multiple deadlines in the negotiations, and delayed their latest meeting to Tuesday.

The parties all publicly oppose steep cuts in public sector pay demanded by the eurozone and the IMF, but their backing is needed for the government to reach a deal for the bailout, which must be approved by the Greek Parliament.

Greece cannot cover a [euro]14.5-billion bond repayment due March 20 without the second bailout.

Markets have been sensitive to the Greek debt crisis since a default would cause havoc in the region's financial system.

"For a country of relatively few people in the grand scheme of things, not a significant size of economy, it sure has been in the headlines," said Garey Aitken, director of equity research at Bissett Investment Management in Calgary.

He added that he doesn't think the European debt crisis is going away any time soon and observed that even if there was a resolution to the Greek debt issue tomorrow, "then later this week we would probably be talking about refinancing issues with Italy or Spain."

"It's one hurdle or disappointment after another and... there is so much hope and comments that are viewed as positive but when you get to the detail and the actual implementation and execution, there's been very little of that coming out of Europe."

A stronger U.S. dollar helped depress commodity prices, as oil and metals are denominated in dollars which makes commodities more expensive for holders of other currencies.

The base metals sector lost 1.35 per cent as March copper slipped four cents to US$3.86 a pound. Teck Resources (TSX:TCK.B) gave back 90 cents to C$42.50 and First Quantum Minerals (TSX:FM) fell 79 cents to $22.64.

The energy sector slipped 0.11 per cent as the March crude contract on the New York Mercantile Exchange lost 93 cents to US$96. …

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