The Toronto stock market was lower Monday as investors looked at the prospect of additional sanctions being levied on Russia for its support of Ukrainian rebels who are being blamed for the shooting down of a Malaysian airliner.
The S&P/TSX composite index was down 39.59 points to 15,226.98.
The Canadian dollar was down 0.1 of a cent to 93.04 cents US.
Losses were steeper in New York where the Dow Jones industrials lost 108.53 points to 16,991.65, the Nasdaq fell 21.94 points to 4,410.2 and the S&P 500 index was 10.66 points lower to 1,967.56.
The disaster, in an area controlled by pro-Russian separatists, has sparked international condemnation and increased pressure on Russia to stop meddling in Ukraine. Russian officials have blamed Ukraine’s government for creating the situation and atmosphere in which the plane was downed last Friday.
There have been calls for another round of sanctions that would target entire industries, but there are worries that such action would serve to undermine what is still a very fragile economic recovery in Europe.
“You have to remember it’s been a low-quality recovery in the first place because at the end of the day, where is the growth going to come from?” said Brian Belski, chief investment strategist at BMO Capital Markets in Chicago.
“The luxury that America has in terms in coming out of its doldrums in 2008, ‘09 and ‘10 was that the U.S. remains the world’s largest growth factor in terms of gross domestic product. Europe has a lot of structural issues facing it and these types of things just don’t help.”
Concerns about the effect of tightening sanctions also hit stocks of big American multi-nationals. For example, General Electric fell 2.4 per cent to $25.83 (U.S.).
Traders also focused on Israel’s ground offensive that started in Gaza at the end of last week.
Israeli Defence Minister Moshe Yaalon said Monday he is prepared to continue the offensive “as long as necessary” to halt rocket fire and other attacks from Gaza on Israelis.
Israel accepted an Egyptian call for an unconditional cease-fire last week, but resumed its offensive after Hamas rejected the proposal.
Hamas says that before halting fire, it wants guarantees that Israel and Egypt will significantly ease a seven-year border blockade of Gaza.
The energy sector led TSX decliners, down 0.57 per cent while August crude on the New York Mercantile Exchange added 87 cents to $104 (U.S.) a barrel.
Gold stocks lost early momentum even as traders looking for safety pushed August gold up $4.30 to $1,313.70 an ounce. The sector was down 0.5 per cent.
The base metals component was down 0.2 per cent while September copper was up a penny at $3.20 a pound.
Investors also looked for the pace of Canadian second quarter earnings reports to pick up this week. Canadian National Railways posts results after the close and expectations are high after Canadian Pacific Railway delivered a well-received report last Thursday.
Other big Canadian companies reporting this week include Husky Energy, Rogers Communications, Loblaw Co. Ltd. and Teck Resources on Thursday.