CANADA STOCKS-TSX flat with eye on U.S. budget talks; golds weigh

Reuters

* TSX edges down 2.30 points, or 0.02 percent, to 12,892.11

* Five of 10 main sectors advance

* Potash slips after cut in profit forecast

* Barrick, Goldcorp weigh the most on market

By Solarina Ho

TORONTO, Oct 11 (Reuters) - Canada's main stock index was

little changed on Friday with investors awaiting a resolution by

U.S. lawmakers to end a federal government shutdown and overall

market action muted ahead of the Canadian Thanksgiving long

weekend.

A drop in gold producers and a decline in Potash Corp of

Saskatchewan Inc, after the fertilizer company cut its

profit forecast for the third quarter, weighed on the market,

offsetting some of the optimism around a possible deal being

reached in Washington.

"The TSX is of course adversely affected today by the drop

in precious metals in particular ... you also had that

announcement by Potash pre-warning," said David Baskin,

portfolio manager and president of Baskin Financial Services

"Add that all up, and that's why Canada is not following the

U.S. uphill."

After recording its biggest jump in three months in the

previous session, the Toronto Stock Exchange's S&P/TSX composite

index finished the session down 2.30 points, or 0.02

percent, at 12,892.11.

President Barack Obama and congressional Republican leaders

worked to end their fiscal impasse on Friday but struggled to

strike a deal on the details for a short-term reopening of the

government and an increase in the U.S. debt limit.

Failure to raise the borrowing limit would have serious

repercussions for the fiscal standing of the United States, the

world's biggest economy, and for markets and economies of the

United States and other nations worldwide.

Investors, who are also looking ahead to the start of the

earnings session soon, hesitated to make calls until there was

certainty about a resolution to the crisis.

"We're certainly sitting on the sidelines," said David

Cockfield, managing director and portfolio manager at Northland

Wealth Management. "I just keep my head down for the moment."

"I want to see some actual results before I make up my mind

how this is going to turn out," he added. "I don't think it's

over until it's over."

Five of the 10 main sectors on the index were higher Friday.

The financial sector gained 0.4 percent, with Royal Bank of

Canada climbing 0.5 percent to C$68.03.

Energy shares added nearly 0.5 percent, with TransCanada

Corp rising 1.2 percent to C$45.33. Encana Corp

added 2.1 percent to C$18.30. The two companies were

among the most influential movers on the index.

But weakness in the price of bullion weighed on the

materials sector, which includes mining stocks.

Gold producers fell more than 3 percent. Barrick Gold Corp

shed 3.9 percent to C$17.81, and Goldcorp Inc

fell 3.1 percent to C$24.48. The two stocks had the biggest

negative influence on the market.

Potash Corp was down 1.6 percent at C$32.46 after it

estimated quarterly profit would be below market expectations as

customers delayed purchases amid market uncertainty.

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