The Toronto stock market was sharply lower Wednesday amid falling commodities and good news about the strength of the American banking system.
The S&P/TSX composite index dropped 162.55 points to 12,375.14, led by sliding gold stocks as improving sentiment about the U.S. economy continued to punish gold prices. The April bullion contract in New York tumbled $49.90 to $1,644.30 (U.S.).
The TSX Venture Exchange was down 28.35 points to 1,599.02.
The Canadian dollar lost 0.19 of a cent to 100.9 cents (U.S.).
American markets were listless despite news after the close Tuesday that all but four of 19 major U.S. banks passed a Federal Reserve "stress test" exercise.
They also got the green light to boost dividends and take other steps that will make their stocks more attractive to investors.
One notable exception was Citigroup, the third-largest bank in the U.S. It was among the companies the Fed said lacked enough capital to withstand another severe economic and financial crisis and its stock was down four per cent in New York.
The Dow Jones industrials moved up 4.62 points to 13,182.3.
The Nasdaq dipped 1.39 points to 3,038.49 while the S&P 500 index edged 2.34 points lower to 1,393.61.
Canadian banks didn't benefit much from the stress test results but strong gains in insurers pushed the TSX financial sector up 0.75 per cent with Manulife Financial ahead 70 cents to $13.35 while Sun Life Financial (TSX:SLF) gained 62 cents to $22.26.
The gold sector lost 3.73 per cent with Barrick Gold Corp. (TSX:ABX) down $2.07 to $42.85 while Agnico Eagle Mines (TSX:AEM) faded $1.28 to $33.63.
The energy sector fell 1.4 per cent as crude prices fell even as data showed a smaller than expected increase in inventories last week. The U.S. Energy Information Administration said crude supplies rose 1.8 million, far less than the 2.1 million increase that analysts expected. Oil was down 84 cents to $105.87 (U.S.) a barrel. Suncor Energy (TSX:SU) fell $1.31 to $32.73 while Talisman Energy (TSX:TLM) dropped 28 cents to $13.21.
Metal prices were lower with copper down five cents to $3.85 (U.S.) a pound, sending the base metals sector down 2.7 per cent. Teck Resources (TSX:TCK.B) gave back $1.23 to $35.30 while Ivanhoe Mines (TSX:IVN) was off 32 cents to $17.97.
Stock markets surged Tuesday as investors felt better about the pace of the U.S. economic recovery in the wake of a strong retail sales report for last month. Also, the U.S. Federal Reserve said that strains in global financial markets have eased, household and business spending have continued to advance and labour conditions have continued to improve.
Sentiment also got a big boost after JPMorgan Chase said it was raising its dividend by five cents to 30 cents a share and approved a $15-billion (U.S.) stock repurchase program.
The good news sent the Dow industrials up 218 points to the highest level since Dec. 31, 2007, leaving the blue chip barometer up almost eight per cent year to date.
The TSX ran up 110 points Tuesday but the resource-heavy TSX has lagged New York's performance. The main index is up almost five per cent but down about 1.6 per cent from the highs of this year.
New York also outperformed the TSX for 2011, which Gavin Graham, president of Graham Investment Strategy said doesn't follow with what expected.
"The reason we underperformed (in 2011) was worries about economic growth and the European debt crisis in the second half of last year," said Gavin Graham, president of Graham Investment Strategy.
"Given that (those concerns have) been put to bed, for the moment at least, and given that we've had a pretty decent run since the lows of October, you would anticipate the TSX doing better but that's not been the case."
On the earnings front, shares in Mega Brands (TSX:MB) tumbled $1.33 or 16.88 per cent to $6.55 after the toymaker reported that profits were hurt in the fourth quarter as holiday sales came in lower, particularly in the United States. Net income declined to $234,000 (U.S.) from $11.3-million a year earlier. On a per share basis, the results were equal to a loss of 14 cents per share versus a profit of 17 cents per share a year earlier.
Revenues fell three per cent in the quarter.
Pure Energy Services Ltd. (TSX:PSV) more than doubled its fourth-quarter profit compared with a year ago to $9.4-million. Revenue improved more than 40 per cent on strong demand for its services and a shift from vertical to horizontal drilling and its shares slipped 17 cents to $9.01.
European bourses were positive with London's FTSE 100 index ahead 0.43 per cent, Frankfurt's DAX gained 1.39 per cent and the Paris CAC climbed 0.49 per cent.