03/12/2012 08:45 EDT | Updated 05/12/2012 05:12 EDT

TSX closes lower amid possible offer for Viterra, disappointing Chinese data

TORONTO - The Toronto stock market closed lower Monday as weak Chinese data punished commodity prices after a strong run-up last week.

The S&P/TSX composite index gave back 75.61 points to 12,428.01 as investors also took in a possible multibillion-dollar deal in the resource sector.

The Sunday Telegraph reported that Viterra Inc., Canada’s largest publicly traded grain handler, has received an offer from Swiss commodities firm Glencore PLC worth C$5.5 billion. Glencore declined to provide any comment on the reports to The Canadian Press.

Viterra’s shares jumped another 87 cents or 6.41 per cent to $14.45. The stock had surged 24 per cent Friday after Viterra said it had received expressions of interest.

The TSX Venture Exchange was down 13.71 points to 1,636.1.

The Canadian dollar dropped 0.18 of a cent to 100.74 cents US.

U.S. markets were mixed with the Dow industrials up 37.69 points to 12,959.71.

The Nasdaq composite index was down 4.68 points to 2,983.66 and the S&P 500 index added 0.22 of a point to 1,371.09.

Commodity prices were lower Monday after China reported its biggest monthly trade deficit in at least a decade in February as imports rebounded after a Lunar New Year holiday slowdown in January. But the combined figures for both months showed growth in imports and exports decelerating markedly.

China, the world's second-biggest economy, has been a major prop for a global economy still recovering from the 2008 financial crisis.

"More than that, they’ve been the driver," said Chris King, portfolio manager at Morgan, Meighen and Associates.

"They did a lot of support in infrastructure projects from 2008 to 2010. We need to remember, they use up 44 per cent of the world’s copper."

The base metals sector lost 2.43 per cent as demand worries pushed copper down two cents to US$3.84 a pound as reports of slowing Chinese growth often result in a short-term selloff in commodities. First Quantum Minerals (TSX:FM) eased 48 cents to c$20.45 and Teck Resources (TSX:TCK.B) declined $1.04 to $35.49.

The April crude contract on the New York Mercantile Exchange was down $1.06 to US$106.34 a barrel and the TSX energy group was off 1.75 per cent. Suncor Energy (TSX:SU) was $1.05 lower to c$33.19 and Canadian Natural Resources (TSX:CNQ) lost $1.11 to $34.40.

The gold sector declined 1.13 per cent as bullion lost $11.70 to US$1,699.80 an ounce. Goldcorp Inc. (TSX:ABX) faded 65 cents to C$46.25 as it announced that development will continue on the $3.9-billion El Morro copper and gold project as planned unless Chile’s Supreme Court upholds a decision that rescinds its environmental permit. Kinross Gold (TSX:K) was down 18 cents at $10.82.

Positive economic news from China and the U.S. had helped push prices for oil and metals higher the previous three sessions.

Lower inflation raised hopes that the Chinese government might embark on further measures to stimulate the economy while traders also welcomed data showing the U.S. economy created more than 200,000 jobs for a third month in a row in February.

The declines on the TSX followed two, consecutive weekly declines despite improving economic conditions. Toronto and New York markets have rallied practically non-stop since early October, leaving the TSX up about 12 per cent since then, leaving markets vulnerable to a correction.

"Whether we do a retracement or not, we certainly should look to a period of consolidation," added King.

"Last year, we became too giddy on capital markets and they raced ahead with unbridled expectations of corporate earnings growth to the sky. As we enter the corporate warning season for earnings for the first quarter, I think people are being a little more tempered, which is good."

Meanwhile, Greece implemented the biggest debt writedown in history on Monday, swapping the bulk of its privately held bonds with new ones worth less than half their original value.

The debt exchange opens the way for Greece’s second international bailout, expected to be finalized this week by finance ministers from eurozone countries. It will also transfer the majority of the country’s debt from private into public ownership — its eurozone partners and the International Monetary Fund.

In other corporate news, Federal Labour Minister Lisa Raitt said she would introduce back-to-work legislation in connection with Air Canada (TSX:AC.B) and its labour dispute with its pilots and machinists unions. The bill follows a move by the minister last week to block a work stoppage at the airline by referring the disputes to the Canada Industrial Relations Board. Air Canada shares were down three cents to 92 cents.

Enbridge Inc. (TSX:ENB) says it faces a potential writedown of a “significant portion” of its $460-million investment in Enbridge Gas New Brunswick. Its shares were up nine cents to $38.70.

Valeant Pharmaceuticals International, Inc. (TSX:VRX) has acquired a 19.9 per cent equity interest in a Brazilian research company focused on tissue regeneration. The Toronto-area drug company said Monday that it paid less than $10 million for the stake in Pele Nova Biotecnologia SA. Valeant shares were down 82 cents to $54.27.