TORONTO (Reuters) - Toronto’s main stock market index sank more than 3 percent on Monday, notching its lowest close since July 2010, as fears about global growth and a Greek default drove investors to the exits.
All 10 of the index’s sectors were down sharply, led by energy, base-metals and financial shares as commodity prices tumbled and investors worried about the exposure of banks to European debt after Greece warned it would miss deficit-cutting targets this year.
Among the heaviest decliners, Suncor Energy (SU.TO) slid 5.5 percent to C$25.28, Toronto-Dominion Bank (TD.TO) dropped 3 percent to C$71.67, Canadian Natural Resources (CNQ.TO) fell 5.6 percent to C$29.05, and Royal Bank of Canada (RY.TO) was down 2.7 percent to C$46.78.
Canadian banks have said they have little or no exposure to Greek debt, but dropped in sympathy with their U.S. and European counterparts.
“It’s no surprise that in the financial group, which is what people are most worried about, there’s no such thing as decoupling,” said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates.
“Even though Canadian banks may be stronger, they tend to be hit along with the others.”
Adding to the pessimism, figures showed global manufacturing shrank for the first time in more than two years in September, reinforcing fears of another recession despite a modest bounce in U.S. factory activity.
Slowing growth in China is a particular concern for Canada’s resource-heavy market, Kumar said, noting investors will have a better sense of the market’s bottom once earnings estimates are cut sufficiently to reflect a deteriorating economy.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended down 372 points, or 3.2 percent, at 11,251.84. The day’s low was 11,221.21.
Joe Ismail, technical analyst at Maison Placements Canada in Edmonton, said the TSX is in major oversold territory though it still has room to fall. He said the next major support level is around 9,500-9,700.
The few gainers were led by Euro Goldfields EGU.TO, which jumped 15 percent to C$9.60 after it said it has agreed to terms for a $600-million, seven-year loan from Qatar Holdings.
Birchcliff Energy (BIR.TO) also surged, rising 14 percent to C$11.61 after the company said it was looking to sell itself after receiving unsolicited buyout offers.
Friday marked the end of the worst quarter for Canadian equities since 2008. The TSX extended losses on Monday despite positive flows usually seen on the first day of a new quarter. The index has fallen more than 20 percent since highs reached in March.
Editing by Peter Galloway