TSX falls 2 percent as commodities sink on Japan, MF

Mon Oct 31, 2011 5:23pm EDT
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By Jon Cook

TORONTO (Reuters) - Canadian stocks got spooked on Monday, falling more than 2 percent, with sliding commodities, Japanese market intervention, the failure of a major brokerage and Europe's lingering crisis all making investors jittery.

A surprise move by Japan to weaken its currency by buying U.S. dollars, caught the market off guard and had a negative trickle-down effect on equities, commodities and other risky assets.

"We did not expect to wake up to see the Japanese buying currency," said Brendan Caldwell, chief executive of Caldwell Investment Management Ltd. "At the moment of actual crisis, there is no substitute for the U.S. dollar, nor will there likely be for the foreseeable future."

Adding to the market's worries, U.S. futures broker MF Global filed for bankruptcy on Monday.

Renewed doubts about the euro zone's debt crisis plan also helped put an abrupt end to October's stock market rally.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE, dropped 267.45 points, or 2.1 percent, at 12,252.06. It was the TSX's worst daily decline in nearly a month.

Still, the index finished October up 5.4 percent, its biggest one-month gain since May, 2009.

Nine of the Canadian market's 10 main sectors were lower, led by a 3.41 percent drop in energy stocks, which fell as oil prices slipped in low-volume trading.   Continued...

<p>People walk by a Bay Street sign inside the financial district in Toronto October 10, 2008. REUTERS/Mark Blinch</p>