The S&P/TSX composite index lost 53.51 points to 11,951.9.
The telecom sector fell almost 5.5 per cent after the Globe and Mail reported that Verizon Communications Inc. (NYSE:VZ) is looking at two of Canada's smaller wireless network operators. It has reportedly made an initial offer of $700 million for Wind Mobile and is starting talks with Mobilicity.
The potential for competition from a big American telecom punished the large Canadian telecoms, although most were off early lows. Telus Corp. (TSX:T) dropped $2.67 or eight per cent to $30.70, Rogers Communications (TSX:RCI.B) fell $4.22 or 9.2 per cent to $41.67 and BCE Inc. (TSX:BCE) gave back $1.75 or 4.04 per cent to $41.57.
"The competition that’s been out there lately, they’ve been smaller companies and there’s been some involvement with overseas companies," said Colin Cieszynski, market analyst at CMC Markets Canada.
"But Verizon is completely different. (They have) incredibly deep pockets and resources and a company that is clearly committed to North America and understands the market. They could be a pretty serious competitor if they decided they wanted to be."
The Canadian dollar was up 0.27 of a cent to 95.43 cents US as the U.S. dollar weakened following the release of data showing U.S. growth in the first quarter wasn't as robust as previously thought.
The U.S. Commerce Department said it now estimates U.S. gross domestic product grew at an annualized rate of only 1.8 per cent. That is down sharply from the previous reading of 2.4 per cent but still stronger than in the fourth quarter.
The loonie has been hit with a string of losses recently because of a U.S. dollar that has strengthened on indications that the U.S. Federal Reserve looks set to ease up on its bond purchase program.
U.S. markets had a much better day as buyers snapped up stocks for a second session following sharp losses last week, with the report on slower economic growth making traders and investors less anxious that the Federal Reserve will end its economic stimulus too soon.
The Dow Jones industrial average racked up a second, consecutive triple-digit gain, up 149.83 points to 14,910.14.
The Nasdaq was up 28.34 points to 3,376.22 while the S&P 500 index advanced 15.23 points to 1,603.26.
On the TSX, the gold sector was the biggest percentage decliner, down about six per cent as speculation over what the Fed will do in tapering its US$85 billion a month in bond purchases continued to pummel bullion prices. The August contract fell $45.30 to a three-year low of US$1,229.80 an ounce. Barrick Gold (TSX:ABX) lost $1.41 or 8.34 per cent to C$15.50 while Iamgold (TSX:IMG) tumbled 34 cents to $4.03.
Fed chairman Ben Bernanke said last week that the pace of bond buying could slow later this year as long as economic data shows continued improvement. A string of solid economic data released Tuesday on manufacturing, housing and consumer sentiment has further reinforced the view that the central bank is ready to act and could wind up the program by next year.
The TSX gold sector is by far the worst performer on the Toronto market, down 46 per cent so far this year. Share prices in gold miners were already feeling pressure as bottom lines were hit by rising costs. But gold prices have deteriorated steadily this year as the precious metal loses its appeal as a hedge against inflation and deteriorating currencies.
"Over the last two years, the whole safe haven thing has kind of been eroded," Cieszynski said.
"(Bullion is) traditionally an inflation hedge. So it’s gone up when people were worried about inflation and, with commodity markets staying relatively low and not going anywhere, the inflation pressures aren’t there and that’s dragging on gold and silver too."
Other commodities were lower and the energy sector was down 0.24 per cent as the August crude contract on the New York Mercantile Exchange moved up 18 cents to US$95.50 a barrel. Talisman Energy (TSX:TLM) shed 16 cents to C$12.02.
The base metals sector fell one per cent with July copper down three cents at US$3.04 a pound. HudBay Minerals (TSX:HBM) gave up 34 cents to C$6.73.
Financials were up 0.67 per cent and Royal Bank (TSX:RY) climbed 81 cents to $60.96.
The consumer staples sector was also higher as grocer Loblaw Cos. (TSX:L) rose 74 cents to $47.51.
Techs were also supportive as BlackBerry (TSX:BB) rose 31 cents to $15.63.
Rail stocks also provided buoyancy for the TSX and Canadian National Railways (TSX:CNR) climbed 80 cents to $101.54. Elsewhere in the industrials group, transport giant Bombardier Inc. (TSX:BBD.B) fell 10 cents to $4.57 after the company announced that the first flight of its new CSeries jet has been delayed by a month to the end of July.Suggest a correction