TSX little changed, Kinross drop offsets China

Toronto's main stock index was slightly lower on Tuesday as losses from gold miners offset the impact of an early surge in commodity prices that were boosted by solid economic data from China and Germany.

The heavily weighted materials sector fell more than 1 percent, led lower by a near 20-percent drop in Kinross Gold (K.TO: Quote) to C$10.65.

At least two brokerages cut their ratings on the stock after the miner announced delays of as long as nine months at the massive Tasiast gold mine in Mauritania. (K.TO: Quote)

The biggest drag is Kinross, said Philip Petursson, an analyst with the portfolio advisory group at Manulife Asset Management.

At 11:35 a.m., the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 25.10 points, or 0.2 percent, to 12,233.50.

The TSX rose at the open as commodity prices surged after better-than-expected growth data from top metal consumer China lifted financial markets, boosted oil and gold prices and eased worries over weakening metals demand.

The Chinese economy grew by 8.9 percent in the fourth quarter of 2011 compared with the same period one year earlier, beating a forecast of 8.7 percent expansion by economists polled by Reuters, although growth was at the slowest pace in 2-1/2 years.

The biggest wildcard is China and anytime we can get some positive news it bodes well for the global economy, said Petursson. The growth number that we see out of China bodes well for commodities.

Canadian oil and gas issues were up 0.3 percent, led by a 3.3-percent jump in Cenovus Energy (CVE.TO: Quote) shares to C$34.67.

Global economic outlook was also boosted by German investor sentiment, which posted its biggest ever monthly improvement in January, helped by recent upbeat data and hopes for the European Central Bank's efforts to ease the region's debt problems.

Also on Tuesday, U.S. manufacturing data showed growth picked up in January, rising to the highest level in nine months.

The news helped investors look past last week's Standard & Poor's credit downgrade of several euro zone countries and it's Monday downgrade of the region's primary rescue fund.

However anxiety remained about the prospects of a Greek debt default, which some fear could happen as soon as March when 14.5 billion euros of bond redemptions fall due.

($1 = $1.01 Canadian)