TSX adds to monthly decline as First Quantum slides

The Art Deco facade of the original Toronto Stock Exchange building is seen on Bay Street in Toronto, Ontario, Canada January 23, 2019. REUTERS/Chris Helgren/File Photo

By Fergal Smith

(Reuters) -Canada's main stock index ended lower on Friday, adding to its monthly decline, as shares of First Quantum Minerals tumbled and Wall Street was unable to hang on to the gains it made after the release of cooler U.S. inflation data.

The Toronto Stock Exchange's S&P/TSX composite index ended down 66.37 points, or 0.3%, at 21,875.79.

For the month, the TSX was down 1.8% as investors shunned resource shares in favor of technology, while it posted a quarterly decline of 1.3%.

First Quantum Minerals Ltd shares fell 7.2% as Reuters reported the miner will launch formal arbitration proceedings against Panama in July over the country's decision to close the Cobre Panama mine last November.

The materials group, which includes metal miners and fertilizer companies, lost 1.1%, while energy was down 0.2% as the price of oil settled 0.2% lower at $81.54 a barrel.

U.S. monthly inflation was unchanged in May as a modest increase in the cost of services was offset by the largest drop in goods prices in six months, drawing the Federal Reserve closer to start cutting interest rates later this year.

"I suspect Fed would take another month of confirmation of the inflation data, but I continue to believe that September is a reasonable starting point for rate cuts," said Youssef Zohny, founder of The Zohny Group of Graystone Consulting at Morgan Stanley.

The Bank of Canada has already started its easing cycle but investors have become doubtful the central bank would cut again at its next policy decision on July 24 after the release of hotter-than-expected domestic inflation data on Tuesday.

Data on Friday showed Canada's gross domestic product increased 0.3% in April, matching market expectations, while a preliminary estimate showed the economy expanded by a further 0.1% in May.

(Reporting by Fergal Smith in Toronto and Nikhil Sharma in Bengaluru; Editing by Vijay Kishore, Shreya Biswas and Daniel Wallis)