TSX falls as Tahoe plunges on mine suspension; Air Canada jumps

By Alastair Sharp

TORONTO (Reuters) – Canada’s benchmark stock index fell on Thursday in a broad retreat, with Tahoe Resources Inc plunging after its license to operate in Guatemala was suspended and Toronto housing data weighing on the financial sector.

Tahoe’s Canada-listed shares ended down 33.2 percent at C$7.19 as the company said the suspension of operations at its flagship Escobal silver mine meant it could no longer confirm its previously issued 2017 outlook. Several banks cut their target prices and recommendations on the stock.

It is not clear how long the mine will be closed, as the company takes legal steps to have the license reinstated while the case is heard.

“If it’s shut down for three months, then 30 percent is probably a bit of an overreaction,” said Ian Scott, an equity analyst at Manulife Asset Management. “If you’re down for a year or longer, then maybe it’s a bit more onside.”

Scott said that lingering housing concerns weighed on banking stocks that should have otherwise benefited more from a broad rise on global bond yields.

Home sales in the red-hot Toronto market fell for the third consecutive month in June, while more owners put their properties up for sale as they worried a rapid acceleration in prices had peaked, data showed.

“As long as those housing concerns still linger and as long as oil isn’t acting properly, you could see the TSX trading lower,” Scott said.

Energy stocks ended off 0.7 percent, as an oil rally faded despite a sharper-than-expected decline in U.S. crude oil and gasoline stocks.

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