TSX stumbles as greenback rally hurts commodity players

By Alastair Sharp

TORONTO (Reuters) - Canada's main stock index stumbled on Tuesday as gold miners, banks and energy companies led a broad sell-off that had value investors cheering as data reminded the market that U.S. interest rates will eventually rise.

With a long period of low borrowing costs, money has sloshed into equities, one portfolio manager said. Some of the froth could be removed with each economic report that prompts the U.S. Federal Reserve closer to a rate hike.

"Markets are expensive and I've got cash, so I'm thrilled," said Norman Levine, managing director at Portfolio Management Corp. "I've got stuff I want to buy and I'd love to see the markets come down."

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) lost 136.59 points, or 0.90 percent, to 15,050.81 for its biggest one-day drop in several weeks. Of the 10 main sectors, only info tech gained.

"We're not negative, we just think we're long, long overdue a correction (in North American markets)," Levine said.

Among the heaviest weights were several major banks - which all report earnings this week - as well as blue-chip oil and gas names and major global gold miners.

But the pullback was also deep, with declining issues outnumbered advancing ones by more than 6-to-1.

After a lackluster first quarter, the U.S. economy was showing signs of getting back on track, the latest indicator being better-than-expected durable goods orders.

"Durable goods orders have turned back around, the U.S. economy is strengthening, the Fed raising interest rates is back on," said Colin Cieszynski, senior market analyst at CMC Markets Canada. "Even if it's not June, it may not be December either."

The resulting appreciation in the U.S. dollar hurt a range of commodities, and by extension the Canadian market, which is heavily populated by resource-related issuers.

The materials group, home to mining companies, fell 2 percent as gold prices slid. Barrick Gold Corp (Toronto:ABX.TO - News) lost 3.7 percent to C$14.56, and Goldcorp Inc (Toronto:G.TO - News) declined 3.5 percent to C$21.72.

Oil fell nearly 3 percent, and energy stocks were another heavy drag, down 1.5 percent. Suncor Energy Inc (Toronto:SU.TO - News) shares fell 2 percent to C$36.21, while Canadian Natural Resources (Toronto:CNQ.TO - News) lost 1.2 percent to C$37.95.

Financial stocks were off 0.9 percent, with Toronto-Dominion Bank (Toronto:TD.TO - News) down 1.2 percent at C$55.69 and Royal Bank of Canada slipping 0.9 percent to C$79.57.

(Additional reporting by Solarina Ho; Editing by Meredith Mazzilli and Dan Grebler)