* TSX drops 70.11 points, or 0.56 pct, to 12,467.58
* Strong US$, Fed pushes gold sharply lower
* Eight of 10 sectors lower; materials tumble 2.5 pct
By Jennifer Kwan
TORONTO, March 14 (Reuters) - Toronto’s main stock index sank on Wednesday, bucking the global equities trend, as gold lost its safe-haven appeal as the U.S. dollar strengthened after the U.S. Federal Reserve upgraded its economic outlook the day before.
The greenback hit a fresh 11-month high against the yen and a new one-month high against the euro on the Fed statement, which came after a string of U.S. data that indicate a firm economic recovery.
Oil and gold prices skidded as gains in the U.S. currency can pressure dollar-denominated commodities by making them more expensive to buyers using other currencies.
Gavin Graham, president at Graham Investment Strategy, said gold’s safe-haven bid has been diminished by the stronger economic outlook and an easing of concerns about the euro zone’s debt problems.
“The bid isn’t there in the same way because the perceived risk has declined a bit,” he said.
The steep slide in gold prices also reflects the market perception that the Fed is now unlikely to ease credit any further, with bullion prices giving up almost all of the gains they made after Jan. 25, when the U.S. central bank signaled that it could provide additional policy stimulus.
Among big resource shares, miner Barrick Gold dropped 3.6 percent to C$43.32 and oil company Suncor Energy fell 3.1 percent to C$33.00. Goldcorp sank 3.6 percent to C$43.90 and fellow miner Kinross Gold dropped 3.3 percent to C$10.06. The index’s materials group, which includes gold miners, skidded 2.5 percent and led the index lower.
At around 10:10 a.m. (1410 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was 70.11 points, or 0.56 percent, lower at 12,467.58, with eight of its 10 key sectors lower.
The Toronto market diverged from stock markets around the world, which climbed on Wednesday on the sunnier economic outlook and as most U.S. banks passed their annual stress tests in a report that underscored the recovery of the financial sector but called out a few laggards, including Citigroup Inc.
That positive tone spilled over into the Canadian financial sector, which climbed 0.8 percent. Royal Bank of Canada rose half a percent to C$58.26 and Toronto-Dominion Bank climbed 0.7 percent to C$83.90.
In company news, Canada’s Mega Brands, down 18 percent at C$6.45, reported a 97 percent fall in adjusted fourth-quarter profit, hurt mainly by lower toy sales in the United States.