TORONTO - The Toronto stock market closed lower Tuesday amid flat oil prices while markets failed to get lift from a late-afternoon speech by U.S. Federal Reserve chairman Ben Bernanke, even as he predicted better economic conditions later in the year.
The S&P/TSX composite index lost 35.74 points to 13,282.92 as traders made several tentative forays to buy up shares beaten down in the course of Monday's 199-point plunge, gaining as much as 73 points during the morning.
Traders had looked to Bernanke to provide some reassuring words about the U.S. economy, particularly after Friday's weak employment report. That data, along with other reports showing slower expansion in manufacturing and faltering consumer confidence and softer than expected first quarter growth, have reinforced the view that the American economy is slowing faster than previously thought.
Bernanke linked the recent softening in the U.S. economy to gas prices which have surged alongside crude oil prices since February and supply bottlenecks from Japan in the wake of the massive quake and tsunami in March. He added he sees higher growth in the second half of the year.
"It's been a pretty weak series of data and stocks are selling off reflecting fears of a slowdown, fears of a double-dip (recession) and so on," said Robert Gorman, chief portfolio strategist TD Waterhouse, adding he doesn't think the U.S. will slip back into recession.
"We think we're going though a soft patch in the economy which is not unusual in an economic recovery, it's more common than not. And I would anticipate that you're going to see markets firm and then recover in the second half of the year reflecting that."
The TSX Venture Exchange slipped 10.54 points to 2,004.02.
The Canadian dollar rose sharply as the American dollar weakened against other currencies, up 0.55 of a cent at 102.51 cents US.
The energy sector rose 0.33 per cent even as oil prices closed flat amid speculation that OPEC will raise its production quota this week. The July crude contract on the New York Mercantile Exchange added eight cents to US$99.09 a barrel. Cenovus Energy (TSX:CVE) climbed 48 cents to C$34.49 while Suncor Energy (TSX:SU) added 10 cents to $38.85.
The Organization of Petroleum Exporting Countries meets Wednesday in Vienna.
OPEC ministers could decide to try to push oil prices lower by increasing production. Some OPEC officials have said that they believe prices are too high and threaten global economic recovery.
"If they were to expand production somewhat in light of what is a relatively soft set of numbers we've seen recently, that would be good, no question," said Gorman.
But he added that he expects a "fairly contentious" OPEC meeting where consensus will be difficult.
The industrial sector also provided lift as Bombardier (TSX:BBD.B) shares rose 18 cents to $6.95 after it said it has sold three more smaller CSeries aircraft to an unidentified established airline for US$186 million.
Metal prices were slightly higher as the July copper contract on the Nymex gained a cent at US$4.15 a pound. The base metals sector was down 0.43 per cent with Teck Resources (TSX:TCK.B) down 46 cents to $47.25 while Ivanhoe Mines (TSX:IVN) down 51 cents at C$21.98.
Gold stocks also declined as traders looking for safety had pushed bullion prices up over the last three days. But on Tuesday, the August gold contract in New York lost $3.20 to US$1,544 an ounce. Goldcorp Inc. (TSX:G) fell 59 cents to C$46.82 while Kinross Gold Corp. (TSX:K) faded 22 cents to $15.07.
The tech sector was the weakest group. Shares in Research in Motion (TSX:RIM) fell $1.19 to $36.92 after Apple announced Monday that it's soon launching iMessage for the iPhone, iPod touch and iPad, an instant chat app for exchanging text messages, photos and videos. Its features mimic much of what BlackBerry users have come to love about the popular BBM program, including prompts showing when a message has been received and read, and when other users are typing.
Bernanke made no mention of any new steps the Fed might take to boost the economy. The Fed's US$600 billion Treasury bond-buying program is ending this month. The program was intended to keep interest rates low to strengthen the economy. But critics said it raised the risk of high inflation.
The Fed chairman said the economy still needs the benefit of low interest rates.
New York markets were also lower with the Dow Jones industrial average down 19.15 points at 12,070.81.
The Nasdaq composite index slipped one point to 2,701.56 while the S&P 500 index was off 1.23 points to 1,284.94.
In other corporate news, debt rating agency Moody's Investors Service has put Sino-Forest Corp. (TSX:TRE) under review for a possible downgrade after the Chinese timberland company was accused of fraud. Moody's said even though Sino-Forest has disputed the allegations, the agency was concerned the company's business may be affected even if the accusations are proven false and its shares plunged $2.09 to $4.01. They traded at $19.27 last Tuesday.
Shares in cheesemaker Saputo Inc. (TSX:SAP) dipped 61 cents to $46.50 after it reported a fourth-quarter profit of $102.5 million, up 3.4 per cent from a year ago. The Montreal-based company said its earnings amounted to 49 cents per share, seven cents less than analysts expected.
TimberWest Forest Corp. (TSX:TWF.UN) said after a 60-day search it has not found any proposals superior to the $1.03-billion cash offer made by Columbia Investment Management Corp. and the Public Sector Pension Investment Board. Its shares slipped three cents to $6.09.
Furniture retailer The Brick Ltd. (TSX:BRK) reported first-quarter consolidated profit before income taxes was $2.4 million, compared with a loss of $114.4 million in the same quarter of 2010. Sales in the latest quarter fell to $293.6 million from $306.3 million and its shares added one cent to $2.52.
