TSX pulls back from one-month high as bond yields climb

Sept 5 (Reuters) – Canada’s main stock index fell on Tuesday, including a decline in metal mining shares, as higher bond yields and weak overseas data raised worries about the global growth outlook.

The Toronto Stock Exchange’s S&P/TSX composite index (.GSPTSE) ended down 131.6 points, or 0.6%, at 20,413.76, after posting on Friday its highest closing level since July 31.

The materials sector, which includes precious and base metals miners and fertilizer companies, lost 1.9% as gold and copper prices fell.

“Gold prices are tumbling as the bond market selloff resumes,” Edward Moya, a senior market analyst at OANDA, said in a note. “Wall Street is looking at a U.S. economy that doesn’t look like it is ready to break and that will force the Fed (Federal Reserve) into reiterating that rates will have to stay higher for longer.”

The U.S. 10-year yield , a global benchmark for borrowing costs, was up 8.9 basis points at 4.262%.

Soft European and Chinese economic data also weighed on investor sentiment, Moya said.

China’s services activity expanded at the slowest pace in eight months in August as weak demand continued to dog the world’s second-largest economy and stimulus failed to meaningfully revive consumption.

The industrials sector fell 0.6% and heavily weighted financials were down 0.7%.

Energy was a bright spot, rising 0.6%, as oil settled 1.3% higher at $86.69 a barrel after Saudi Arabia and Russia announced a fresh extension to their voluntary supply cuts.