September 22, 2015 / 1:51 PM / 2 years ago

Resource stocks tumble, taking TSX down 2 percent

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

TORONTO (Reuters) - Canada’s main stock index tumbled more than 2 percent on Tuesday as a sell-off in commodities walloped resource stocks, leading across-the-board declines in volatile trade.

The fall followed roughly 1 percent gains on both Monday and Friday after the Federal Reserve held U.S. interest rates steady last week and as investors continued to fret about Chinese economic growth.

“This sort of activity is like a waltz, you’re going back and forth,” said Irwin Michael, portfolio manager at ABC Funds.

“It’s a no-bid market. There are not many buyers out there,” he said. “It’s volatile, but it’s a tug of war.”

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended the session down 288.35 points, or 2.09 percent, at 13,491.09. All 10 of its main sectors fell.

Gold, copper and U.S. crude oil prices fell, hit by a stronger U.S. dollar and persistent demand worries, particularly out of top resource consumer China. The declines sent the Toronto index’s materials group, home to mining stocks, plunging 4.4 percent.

Potash Corp (POT.TO) lost 6.5 percent to C$29.34, while Barrick Gold Corp (ABX.TO) fell 7.2 percent to C$8.09.

The most influential mover was Valeant Pharmaceuticals International (VRX.TO), a large weight and an erratic stock, which lost 5.4 percent to C$287.17.

The materials decline was echoed by the remaining nine key sectors, with energy sliding 1.7 percent and the hefty financials group, which has considerable exposure to resource companies, also retreating 1.7 percent.

Toronto-Dominion Bank (TD.TO), fell 2.1 percent to C$51.50, while Royal Bank of Canada (RY.TO) lost 1.7 percent to C$71.88.

There were 208 decliners and 37 advancers, for a 5.62-to-1 ratio on the downside. The index posted three new 52-week highs and 11 new lows.

“This market has done this before. You really don’t have to have a major reason - once the selling starts, it accelerates. And the buying is the same,” said David Cockfield, managing director and portfolio manager at Northland Wealth Management.

“It’s volatility and a tendency for people trying to follow the market rather than just invest ... they jumped all over the mining stocks.”

Gold futures GCc1 fell 0.7 percent to $1,123 an ounce. [GOL/] U.S. crude CLc1 prices were down 1.8 percent to $46.17 a barrel, while Brent crude LCOc1 added 0.1 percent to $48.97.[O/R]

Cockfield said if the downward volatility continues, buying opportunities could present themselves but cautioned “Our view is if you get caught up in volatility, you’re going to lose.”

Additional reporting by Solarina Ho; Editing by James Dalgleish

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