Gold stocks weigh on TSX amid thin holiday volumes

TORONTO -- The Toronto stock market closed slightly lower Monday as gold stocks continued to add to huge losses already racked up this year.

The S&P/TSX composite index shed 6.59 points to 13,581.39 amid thinner than usual volumes as 2013 trading winds down.

"(Traders) are looking at 2014 and thinking, what is the investment thesis, what do we feel good about, what's going to be different next year. That's what we're doing," said Kash Pashootan, portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company, who added that 2014 looks challenging for the TSX.

"I think you will see a lot of dissimilar things in terms of the U.S. outperforming Canada. You're going to continue to see a slowing of growth coming out of China which will impact the commodity space."

The Canadian dollar clawed back a chunk of Friday's three-quarters of a cent tumble, up 0.56 of a cent to 93.98 cents US.

New York markets turned in a mixed performance with the Dow Jones industrials up 25.88 points at 16,504.29, the Nasdaq lost 2.39 points to 4,154.2 and the S&P 500 index dipped 0.33 of a point to 1,841.07.

On the economic front, traders took in U.S. data on pending home sales for November that suggested sales are stabilizing after several months of declines.

The National Association of Realtors said its seasonally adjusted pending home sales index ticked up to 101.7 from 101.5 in October. The figure for October was revised lower from an initial reading of 102.1.

Later in the week, the latest readings on house prices, consumer confidence and the American manufacturing sector will be released.

The gold sector led TSX decliners, down about three per cent and adding further damage to a sector already down about 50 per cent for the year. The latest decline came as February bullion lost $10.20 to US$1,203.80 an ounce, bringing the overall price drop for the year to about 28 per cent.

Gold prices have taken a big hit this year as the global economy gradually improved and the U.S. Federal Reserve moved to cut back on a key area of stimulus, its monthly bond purchases.

"You had the perfect storm," said Pashootan.

"On a valuation basis, the shares weren't cheap because they had appreciated considerably for the last decade, especially the last five years, so it was at a much higher (valuation) than we had seen in the last 10 years. Then you had every factor work against it, with the economy improving, with the Fed tapering, this type of thing."

Goldcorp (TSX:G) gave back 86 cents to C$22.25 while Iamgold (TSX:IMG) fell 21 cents to $3.50.

The energy sector was 0.36 per cent lower as the February crude contract on the New York Mercantile Exchange dropped $1.03 to US$99.29 a barrel. Suncor Energy (TSX:SU) was down 36 cents at C$36.88.

The consumer staples component led advancers, up 0.67 per cent with grocer Loblaw (TSX:L) up 55 cents at $42.55.

The tech component was ahead 0.57 per cent with Constellation Software (TSX:CSU) ahead $9.62 to $226.23 while MacDonald Dettwiler & Assoc. (TSX:MDA) climbing $1.56 to $82.48.

The base metals sector gained 0.25 per cent with March copper on the Nymex unchanged at US$3.38 a pound. First Quantum Minerals (TSX:FM) gained 47 cents to C$19.12.

The TSX is preparing to end 2013 with a respectable advance of about nine per cent. Gains would have been greater if not for deep losses in the mining sectors. In addition to the big losses in gold, the base metals component has retreated 22 per cent.

In sharp contrast, the Dow industrials has plowed ahead 26 per cent.

This has also been a strong year for many overseas markets, with Frankfurt's DAX up 26 per cent, the Paris CAC up 18.4 per cent and London's FTSE 100 gaining 14 per cent. But none matched Tokyo's Nikkei 225, which soared 56.7 per cent in 2013 on renewed confidence in the economy after years of feeble growth.

In corporate news, Montreal-based TransForce Inc. (TSX:TFI) has come out the winner in a two-way bidding war for Vitran Corp. (TSX:VTN), another Canadian trucking and logistics company. Toronto-headquartered Vitran is now supporting TransForce's offer of US$6.50 per share in cash for the stock it doesn't already own. The deal is valued at US$136 million, including US$29 million of debt that will be assumed by TransForce. TransForce shares ran ahead 20 cents to $25.11 while Vitran was 25 cents lower at $6.88.

U.S.-based Cooper Tire & Rubber Co. (NYSE:CTB) is calling off its proposed $2.2-billion buyout by India's Apollo Tyres, a deal that would have created the world's seventh-largest tire company. Cooper said Monday that financing is no longer available and that it still believes Apollo breached the terms of the agreement. Cooper shares ran up $1.24 to US$24.20.