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Stocks mixed in early trading amid glum eurozone, Chinese purchasing managers data

Canadian Press, The Canadian Press
0 Comments| August 21, 2014


TORONTO _ The Toronto stock market was lower Thursday amid data showing a weakening in Chinese manufacturing and tepid growth figures from the eurozone.

The S&P/TSX composite index dropped 21.3 points to 15,540.65, weighed down in particular by gold stocks as bullion prices continued to retreat.

The Canadian dollar was up 0.15 of a cent to 91.3 cents US.

U.S. indexes advanced with the Dow Jones industrials ahead 21.72 points to 17,000.85, the Nasdaq rose 2.17 points to 4,528.65 and the S&P 500 index was ahead 2.04 points to 1,988.55.

``There was a handful of purchasing managers index (PMI) readings for August released around the globe overnight, and the overall tone was not all that great,'' said BMO Capital Markets senior economist Robert Kavcic.

The preliminary version of HSBC's manufacturing index for China fell to a three-month low of 50.3 from 51.7 in July, indicating that manufacturing businesses are barely growing.

The HSBC report adds to other recent indicators that the recovery is still shaky. Earlier this month, data showed that China's exports accelerated but imports sagged, which may reflect weakening domestic demand.

Also, the purchasing managers index for the eurozone published by Markit Economics fell to 52.8 from 53.8 in July. The report followed other data earlier this month that showed the 18-country eurozone grew at only a slow pace in August, a sign it remains sluggish after a disappointing second quarter in which it did not expand at all.

The news from Japan was more positive _ there was a firm increase in Japan's manufacturing PMI to 52.4 from 50.5 in the prior month, ahead of expectations and the best level since March.

Meanwhile, the minutes from the latest Federal Reserve meeting released Wednesday indicated that the U.S. central bank is in no rush to hike rates. However, the minutes also showed greater dissension among Fed members on how fast the labour market is improving, a key element in determining when the Fed will raise rates from near zero where they've been since the financial crisis.

The Fed has emphasized that economic data, not the calendar, will determine when it hikes rates, generally expected around the middle of 2015.

Slack in the labour market has been a particular concern, a topic that Fed chairwoman Janet Yellen is expected to address in her speech to the central bank's economic symposium at the end of the week.

The gold sector led decliners, down 1.6 per cent as worries the Fed could move sooner than expected to hike interest rates and a lessening of tensions in the Ukraine/Russia crisis continued to pummel bullion prices. The December gold contract in New York fell $18.90 to US$1,276.30 an ounce.

The metals and mining segment fell 1.15 per cent as the China data helped push September copper down one cent to US$3.16 a pound.

The energy sector edged 0.12 per cent lower while October crude in New York gained 18 cents to US$93.62 a barrel.

The TSX found some lift from financials and consumer staples stocks.


Tags: GOLD

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