Tsx slides on Fed stimulus worries

The Toronto stock market closed lower Wednesday as mining and energy stocks retreated alongside prices for oil and metals while minutes from the Federal Reserve’s latest policy meeting raised fresh questions about the duration of its stimulus program.

The S&P/TSX composite index stepped back 96.16 points to 12,714.05, while the TSX Venture Exchange gave back 40.63 points to 1,131.17.

The Canadian dollar closed at a fresh seven-month low, down US0.53¢ at US98.3¢.

U.S. indexes were lower as investors also learned that several Federal Reserve policymakers continued to express concerns last month about the risks of the Fed’s efforts to boost the U.S. economy by keeping borrowing costs low through bond purchases.

Minutes of the Fed’s Jan. 29-30 policy meeting showed that some officials were worried that the continued purchases could eventually escalate inflation, unsettle financial markets or cause the Fed to absorb losses once it begins selling its investment holdings.

The Fed said it would review its current open-ended program of asset purchases totalling US$85 billion a month in Treasurys and mortgage bonds at the March meeting.

The Dow Jones industrials closed down 108.13 points to 13,927.54. The Nasdaq de- clined 49.18 points to 3,164.41 while the S&P 500 index was down 18.99 points at 1,511.95.

Gold stocks led TSX decliners, down about 4.25% as April bullion fell beneath the key level of US$1,600 an ounce, losing $26.20 to a seven-month low of US$1,578. Other technical factors were at work with analysts talking of a death cross in the market. This event happens when a security’s long-term moving average breaks above its short-term moving average or support level.

Kinross Gold Corp. faded 43¢ to $7.61 while Iamgold lost 49¢ to $7.57.

The base metals component shed 3.26% while March copper declined 4¢ to US$3.61 a pound. Teck Resources dropped $1.06 to $31.71 while HudBay Minerals fell 57¢ to $10.07.

The March crude contract on the New York Mercantile Exchange was down $2.20 to US$94.46 a barrel. Oil prices were undercut by analysts’ expectations for higher U.S. crude supplies when the Energy Department’s Energy Information Administration releases its weekly inventory report on Thursday. Analysts on average forecast a rise of two million barrels, according to Platts, the energy information arm of McGraw-Hill Cos. The energy sector dipped 0.7%. Canadian Natural Resources was down 50¢ to $30.57.