TSX erases 2013 gains after weak U.S. data

Wed Apr 3, 2013 4:54pm EDT
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By John Tilak

TORONTO (Reuters) - Canada's main stock index tumbled more than 2 percent on Wednesday, recording its biggest one-day percentage decline in more than nine months, as sluggish U.S. economic data dampened hopes for a smooth recovery.

The selloff erased all the gains the index has made since the start of the year and took it to its lowest point in more than three months.

U.S. data showed companies hired at the weakest pace in five months in March as recent strong demand for construction jobs evaporated, while growth in the vast services sector slowed.

The reports sparked concern that the recent pick-up in U.S. economic growth is losing momentum and provoked caution among investors ahead of Friday's all-important government report on employment for March. Wall Street, oil and commodity prices all slumped in response. <MKTS/GLOB>

"It's a broad selloff based on fear that there isn't going to be a rebound anytime soon," said Fred Ketchen, director of equity trading at ScotiaMcLeod.

"People are nervous," he added. "They're saying, 'I'm going to run for the hills and I'm going to take my money with me.'"

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 259.98 points, or 2.05 percent, at 12,422.12, putting its year-to-date return in negative territory. It was the biggest percentage drop for the index since June 21, 2012.

"I think the market is ahead of where the fundamentals would put it," said Michael Sprung, president of Sprung Investment Management. "There's likely to be a correction, and this could be the beginning of it."   Continued...

A Bay Street sign is seen in the heart of the financial district in Toronto, August 17, 2009. REUTERS/Mark Blinch