Commodities fall on eurozone fears, weigh on TSX - Canada Financial News

High-level summits, agreements reached to increase bailout packages, limit deficits and form a closer fiscal union — none of it has managed to assuage investors’ fears about the impact the eurozone debt crisis could have on the larger global economy.
Canada’s benchmark stock index declined for a third day on Wednesday as the prices of energy and raw materials dropped sharply. The S&P/TSX composite index dropped 216.90 points, or 1.84%, to 11,543.05. All 10 of the sub-indexes fell, with materials, down 3.29%, and energy, down 2.43%, the most heavily weighted decliners.
The price of crude oil dropped to US$96.95 a barrel, down US$5.19, and gold fell to US$1,586.90 an ounce, a decline of US$76.20.
“It’s very frustrating,” John Carey, a Boston-based money manager at Pioneer Investments, told Bloomberg. “There’s just a hypersensitivity to stories coming out of Europe, ratings, downgrades, what have you. Any indication is seen as something as a basis to trade. That’s continuing to cause anxiety among investors. Nobody sees a way through this at the moment.”
Markets continued to react the previous day’s U.S. Federal Reserve statement that held no indication the central bank was prepared to inject more stimulus into the economy. That had followed European Central Bank president Mario Draghi’s comments that the ECB wasn’t launching a program to buy sovereign debt.
“Meanwhile, the (Munich-based) Ifo (Institute) cutting its 2012 GDP forecast to almost zero growth, eurozone industrial production disappointing, more rumours Italian bond yields continuing to rise at auction and more rumours for a French downgrade circling created a witches’ brew that dragged on sentiment,” wrote CMC analyst Colin Cieszynski in an afternoon note, adding there have been indications European countries may have trouble ratifying last week’s summit deal.
“With the holidays approaching and many markets way down on the year, it appears that many have decided to throw in the towel ahead of the holidays and take their tax losses early. Although this negativity may persist for some time don’t forget that we saw similar action just before the U.S. Thanksgiving holiday last month where extreme pre-holiday jitters and selling ended up setting the stage for a significant rebound.”
The Canadian dollar fell another 50 basis points on Wednesday to 96.19 US cents as commodity prices fell.
“Commodities are taking it on the chin,” Shane Enright, executive director at CIBC World Markets in Toronto, told Bloomberg. “Most of the fallout in Canada has been from that. It’s been a tough few days for gold in particular.”
In the U.S., the Dow Jones industrial average fell 131.46 points, or 1.10%, to 11,823.48, and the Nasdaq composite slipped 39.96 points, or 1.55%, to 2,539.31.
Canada’s junior Venture exchange lost 52.50 points, or 3.60%, to 1,405.93.