The Toronto stock market turned negative Tuesday as traders began to think twice about their optimism over Europe's efforts to rescue its struggling economy.
The S&P/TSX composite index weakened 93.17 points to close at 11,664.71, with most of the decline coming in afternoon trading. The TSX Venture Exchange slipped 1.28 points to 1,183.08. The Canadian dollar fell US0.11¢ to US99.71¢.
Hopes began to fade over how much the European Central Bank will do to help countries with crippling debt when it meets on Thursday.
Meanwhile, the Federal Reserve has started its two-day policy meeting, and is expected to announce some kind of new step to energize the U.S. economy, though the timing is still in question.
Some economists have suggested that the Fed isn't convinced that the U.S. economic slowdown warrants further economic stimulus.
"If the Fed and the ECB don't do anything, as some economists expect, it's going to be quite disappointing for investors," said John Johnston, chief strategist at David Rea Ltd. in an interview.
In U.S. economic data, consumer confidence rose in July for the first time in four months. The Conference Board said the confidence index increased to 65.9, from 62.7 in June. That's the highest reading since April and better than the reading of 62 that economists had forecast.
However, the index sits lower than 90, which indicates a healthy economy.
Also, U.S. home prices rose in May from April in every city tracked by a leading index, a sign that increasing sales and tight inventories are supporting a modest housing recovery. The Standard & Poor's/CaseShiller home price index showed national prices rose 2.2% from April to May, the second increase after seven months of flat or declining readings.
On Wall Street, the Dow Jones industrial average declined 64.33 points to 13,008.68 and the Nasdaq was down 6.32 points at 2,939.52. The S&P fell back 5.98 points to 1,379.32.
The September crude contract on the New York Mercantile Exchange was down $1.72 to US$88.06 a barrel.
September copper moved up 1.5¢ to US$3.42 a pound while August gold ended off $9.20 at US$1,610.50 an ounce.
In corporate developments, Rona Inc. shares were up 13.7% after the company rebuffed an unsolicited takeover from Lowe's Companies worth $1.76 billion. The Montreal-area company said the offer from its American rival wouldn't be in its shareholders' best interest, but Lowe's said it intended to further pursue a transaction. Rona shares rose $1.63 to $13.50.