TSX hit by oil price slump, China worries

Tue Sep 1, 2015 5:15pm EDT
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By Alastair Sharp

TORONTO (Reuters) - Canada's main stock index fell 2.7 percent on Tuesday, in a broad retreat led by financial and energy stocks as oil prices slumped, weak Chinese data renewed fears of slowing growth, and Canada officially slipped into recession.

Canada's energy sector, a major force on the index, dropped 4.6 percent as crude tumbled after a three-day rally.

The financial sector, which accounts for more than 35 percent of the index's weight, fell 2.8 percent.

Overall, the Toronto Stock Exchange's S&P/TSX composite index declined 377.22 points, to close at 13,481.90.

Chinese manufacturing activity shrank in August, while the country's services sector also showed signs of cooling, reinforcing investor fears that the world's second-largest economy may be heading for a hard landing.

"Initially the narrative was that maybe we'd see a 7 percent growth rate in China, but it looks like it's going to be much lower than that," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.

"Some of this fear and panic has to wash out, and that may take another month or two," he said.

The most influential decliners on the index included Royal Bank of Canada, which sank 2.7 percent to C$71.33, and Bank of Nova Scotia, which gave up 3.3 percent to C$58.24.   Continued...

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014. REUTERS/Mark Blinch