Canada stocks end lower on global economic concern

SAN FRANCISCO (MarketWatch) � Canadian stocks closed lower Monday, led by losses in the metals and mining sector, after China reduced its economic growth outlook and as data showed that euro-zone business activity fell back into contraction in February.

The S&P/TSX Composite Index CA:GSPTSE �fell 119.87 points, or 1%, to close at 12,523.95, as Wall Street also started the week off on a lower note. Toronto�s benchmark index lost 0.6% last week.

Click to Play China lowers growth target to 7.5%

Leaders have announced the lowering of the 2012 target growth forecast for the Chinese economy to 7.5% from 8%, a move enough to send a few tremors through the world's financial markets. (Photo: AP.)

�Commodities and resource currencies have started out the week trading lower after China cut its GDP growth forecast for this year,� said Colin Cieszynski, market analyst at CMC Markets Canada, in a note. �This initially weighed on stocks as well, along with generally soft service PMI numbers out of Europe.�

China�s government on Monday lowered its economic-growth target to 7.5% from the 8% rate it has kept for the past eight years. Read more on China.

Traders also weighed the latest economic data from Europe and the U.S.

In Europe, the Markit euro-zone composite purchasing managers index fell to 49.3 in February from 50.4 in January. A reading less than 50 indicates contraction in private-sector business activity.

In the U.S., the Institute for Supply Management on Monday said its service index rose to 57.3% last month, from 56.8% in January. Economists surveyed by MarketWatch expected a fall to 55.5%. Read more on ISM service index.

Separately, the Commerce Department reported that factory orders in January fell by 1% to $462.6 billion, but it also upwardly revised December�s gain to 1.4% growth. Economists expected a 1.5% drop for February.

/quotes/zigman/20942 GSPTSE 11,662.59, +156.09, +1.36%

Against that backdrop, Canadian equities followed global stock markets lower, as China�s Shanghai Composite CN:000001 �and the Stoxx Europe 600 Index XX:SXXP �each closed 0.6% lower, and the Dow Jones Industrial Average DJIA �fell 0.1%. Read more on U.S. markets.

In Toronto trading, the S&P/TSX Capped Diversifed Metals & Mining Index XX:TTMN �led the losses among the S&P/TSX Composite�s subsectors, losing 4.4% as traders fretted about the potential for a decline in China�s demand for resources.

Shares of Teck Resources Ltd. CA:TCK.B �fell 6%, Inmet Mining Corp. CA:IMN �lost 8.1% and First Quantum Minerals Ltd. CA:FM �ended 5.4% lower.

The S&P/TSX Capped Energy Index XX:TTEN �also declined by 1.8%, with shares of Talisman Energy Inc. CA:TLM �and Suncor Energy Inc. CA:SU �each ending 1.1% lower.

On Friday, Statistics Canada reported that inflation-adjusted gross domestic product expanded by an annualized 1.8% in the fourth quarter following an upwardly revised 4.2% increase in the previous quarter. The growth met economists expectations but was lower than the 2% predicted by the Bank of Canada. Read about Friday�s trading in Canada.

In currencies action Monday, the Canadian dollar edged lower against its U.S. counterpart, with the greenback USDCAD �buying 99.41 Canadian cents, up 0.5% from late Friday.