Canada gold shares sink as bullion continues slide
TORONTO, June 1 (Reuters) - Shares in Canadian gold mining companies fell sharply in midday trading on the Toronto Stock Exchange on Monday as renewed pessimism about Asia's economic health and fears of future European gold sales gripped markets.
Gold fell to $288.50 an ounce, its lowest level since mid-January, after Russian bank Uneximbank said it had begun gold shipments under a new export regime.
The move triggered fears of gold supply hikes from Russia and further gold sales by European banks.
Gold markets also reacted to a torrent of gloomy economic news and lowered credit ratings in Asia, with some economists forecasting the region would face a more pronounced economic slowdown than previously expected.
''The selling has come from reports of some gold from Russia, but basically it is the whiff of deflation coming out of the Far East that is causing a rush to the U.S. dollar at the expense of gold,'' said John Ing, president of Maison Placements Canada Inc.
Vancouver-based Placer Dome Inc. (PDG.TO - news) led declines among senior gold producers, falling C$0.95, or 5.2 percent, to C$17.30 in heavy trading.
Junior gold producers, many of whom have teetered on the brink of collapse, also felt the pain of weak bullion prices.
Shares of Toronto-based Agnico-Eagle Mines Ltd. (AGE.TO - news) dropped C$0.70, or 7.5 percent, to C$8.65.
Ing said gold's two-week slide came at a most inopportune time for Canadian producers. ''The failure to hold $300 (an ounce) and now $290 has come about at a time when the industry can least afford it.''
''They're going to have to cut back capital expenditure programs and shut down uneconomical mines,'' Ing predicted.
($1 equals $1.46 Canadian)
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