A man flies his kite at the promenade on the Bund along the Huangpu River, against the skyline of the Lujiazui Financial District in Pudong, Shanghai on December 1, 2014.JOHANNES EISELE/AFP / Getty Images
Canada's main stock index dropped about 1 per cent on Monday as sluggish economic data raised concerns about global growth and volatile oil prices contributed to weakness in the energy sector.
Manufacturing growth in Asia and Europe slowed in November due to weak demand, and the U.S. manufacturing sector growth hit its lowest in 10 months, separate reports showed.
Oil prices remained volatile, slipping to a five-year low before recovering. The choppiness sent shares of energy producers down 3.1 per cent.
The broader Canadian benchmark has been pulled down by recent weakness in energy shares, which have lost more than one-third of their value since the middle of June.
"No one knows how far oil prices could fall," said John Ing, president of Maison Placements Canada. "We're getting the emotional reaction, we are getting the volume reaction, but we're nowhere near a bottom yet."
"This is going to drag down the TSX," he added.
The Toronto Stock Exchange's S&P/TSX composite index was down 159.09 points, or 1.08 per cent, at 14,603.02. Seven of the 10 main sectors in the index were in the red.
Among energy producers, Canadian Natural Resources Ltd. shed 2.6 per cent to $36.98 and Suncor Energy Inc. lost 2.2 per cent to $35.05.
Financials, the most heavily weighted sector, gave back 0.5 per cent. Bank of Montreal was down 1.2 per cent at $82.82.
The gold-mining sector was a bright spot, jumping 3.6 per cent as the bullion price surged. Goldcorp Inc. added 3.8 per cent to $23.25.
In corporate news, mining company Tahoe Resources Inc. said the Guatemalan Congress passed legislation that would raise the royalty rate in the mining law. The stock dropped 6.8 per cent to $16.56.
Weighing on direction is a new Chinese manufacturing activity report that shows weakness in the economy. A survey by HSBC Corp. showed Chinese manufacturing activity weakened in November, adding to signs an economic slowdown is deepening.
HSBC said its purchasing managers' index declined to 50.0 from the previous month's 50.4 on a 100-point scale on which numbers below 50 show activity contracting. The bank said domestic demand was sluggish and new orders were weak. China's economic growth slowed to a five-year low of 7.3 per cent in the latest quarter.
"With an economy that's been incredibly supported by investment, as well as exports and manufacturing activity, to see data start to slow a little bit that is obviously a bit worrisome in terms of the rate of growth for China," said Craig Fehr, an analyst with Edward Jones in St. Louis, Mo.
"With the broad decline we're seeing in commodity prices coupled with the concerns about slowing growth outside North America, I would expect to see those sectors continue to be volatile, if not under pressure, in the near term."
On the TSX, the mining and metals sector fell 4.1 per cent, while energy stocks fell 3.2 per cent.
Crude oil prices made a small gain with the January crude contract on the New York Mercantile Exchange ahead $1.46 to $67.61 (U.S.) a barrel.
Last week, the OPEC oil cartel decided to ignore calls for a cut in production in order to find a floor for prices that have plunged around 35 per cent since mid-summer because of lower demand and a glut of supply, due in large measure to greatly increased production in the U.S. Midwest.
Gold stocks were the biggest gainer, rising three per cent, as December bullion moved up $20.80 at $1,196.30 an ounce, while March copper rose 3.7 cents to $2.88 a pound.
On Wall Street, traders digested figures that showed disappointing U.S. retail sales over Thanksgiving weekend.
The Dow Jones industrials dropped 57.16 points to 17,771.08, the Nasdaq slid 61.83 points to 4,729.80 while the S&P 500 index faded 16.32 points to 2,051.24.
The National Retail Federation reported that early discounting, more online shopping and a mixed economy meant fewer people shopped over the U.S. Thanksgiving weekend. The group said that 133.7 million people shopped in stores and online over the four-day weekend, down 5.2 per cent from last year, according to a survey of 4,631 people. Total spending for the weekend is expected to fall 11 per cent to $50.9-billion (U.S.) from an estimated $57.4-billion last year.
With files from Reuters