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At midday: TSX neutral amid Greek turmoil, fears of slowdown


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The Toronto stock market was little changed late morning Wednesday amid political turmoil in Greece and worries about slowing economic conditions.

The resource-intensive S&P/TSX composite index shook off early triple-digit losses as mining stocks turned positive and was up 9.26 points at 11,714. The TSX Venture Exchange dropped 1.42 points to 1,336.95.

The Canadian dollar was below parity with the U.S. currency as traders continued to avoid riskier assets such as oil and metals and resource-based currencies like the loonie. The dollar fell 0.51 of a cent to 99.66 cents US.

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U.S. markets were also off the worst levels of the session as the Dow Jones industrial average fell 68.54 points to 12,863.55.

The Nasdaq composite index dropped 11.43 points to 2,934.84 and the S&P 500 index lost 7.06 points to 1,356.66.

"Fear over the potential for a Greek exit from the euro continues to weigh on most assets," said a commentary from Barclays Capital.

Greece has weighed on markets since inconclusive elections Sunday failed to produce a party that could form a government.

After the conservative New Democracy failed to muster enough support to form a government, the mandate has passed onto Syriza, a left-wing party that came a surprise second in the election.

Its leader, Alexis Tsipras, said Tuesday that Greece was no longer bound by its promises to cut spending sharply. But failure to keep those promises could see international lenders cut off rescue funding, which would likely lead Greece to default and exit the euro common currency. It would also send shock waves through the euro zone banking system.

"And the reality is the whole European banking system has all this Greek debt on their books. It's unbelievable the amount of debt that is out there," said Jim Muir, director at Fraser Mackenzie.

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Tsipras is not expected to be able to form a government and most observers think a second election will be called for June. But analysts warn that Greece could run out of money as soon as next month without a government to negotiate the next level of its bailout.

Signs of a slowing global economy have also weighed on markets in the wake of weak manufacturing data from Europe and China and a much weaker than expected U.S. employment report last Friday.

Commodity prices have taken a big hit amid these worries and the TSX is more than two per cent below where it started the year.

The gold sector was the major advancer, up 1.37 per cent even as bullion prices retreated with the June contract down $15.70 to $1,588.80 (U.S.) an ounce. Barrick Gold Corp. gained 84 cents to $37.55 (CAN).

But Kinross Gold Corp. fell 13 cents to $7.62 as it reported a first-quarter profit of $105.7-million (U.S.), down from $250.1-million a year ago, as production slipped. Sales totalled $1.04-billion, up from $937-million.

The base metals component gained 1.16 per cent even as metal prices also fell, with the July copper contract in New York down five cents at $3.63 (U.S.) a pound. Copper, viewed as an economic bellwether because it is used in so many industries, has fallen almost six per cent this month. First Quantum Minerals lost 77 cents to $18.76 (CAN) while Taseko Mines was 10 cents higher at $3.01.

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The financials sector was the biggest drag, down one per cent as Royal Bank lost 77 cents to $53.32 and TD Bank gave back $1.24 to $79.18.

The energy sector was slightly higher as the June crude contract on the New York Mercantile Exchange declined $1.05 to a 2012 low of $95.96 (U.S.). Suncor Energy fell 62 cents to $29.15 (CAN) and Talisman Energy moved down 37 cents to $11.11.

Railway stocks also lost more ground, with Canadian National Railways down 63 cents to $81.57.

Canadian Pacific Railway was off 51 cents at $73.18 as an attempt by New York investment firm Pershing Square Capital Management to have its nominees join CP's board of directors and replace chief executive Fred Green gained more momentum. Pershing Square said proxy advisory firm Glass, Lewis & Co. and credit rating agency Egan-Jones Ratings Co. are now backing its plan to revamp CP's board.

European markets were also in the red with London's FTSE 100 index down 1.1 per cent, Frankfurt's DAX off 0.39 per cent and the Paris CAC 40 down 0.53 per cent.

On the earnings front, Tim Hortons Inc. said quarterly net income was up 10 per cent from a year ago to $88.8-million or 56 cents a share. Total revenues were up by 12.1 per cent to $721.3-million but its shares shed $1.88 to $55.20.

In the media sector, Quebecor Inc. said its first-quarter net income rose to $72.9-million, or $1.15 per share, from $34.3-million, or 53 cents per share, a year ago. Its stock slipped 17 cents to $36.83.

And Torstar Corp. shares were off 24 cents at $9.86 as it reported net income of $29.3-million, or 37 cents per share, in the first quarter of 2012. That is up from $15.5-million, or 20 cents, in the first quarter of 2011.

Elsewhere on the corporate front, Telus Corp. shares slipped nine cents to $58.07 as it decided to withdraw a proposal to end its dual-share stock structure just hours before it was to be put to a vote.

The Vancouver-based telecom had been planning to put the proposal for creating a single class of common shares before the company's annual general meeting in Edmonton on Wednesday. However, it said it decided against the move because it faced certain defeat following a campaign led by the U.S.-based hedge fund Mason Capital Management.

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