TSX has biggest single-day drop this month

Wed Dec 14, 2011 4:44pm EST
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By Jon Cook

TORONTO (Reuters) - Canadian stocks suffered their biggest single-day decline this month on Wednesday as natural resource shares were hurt by a dramatic slide in commodity prices on concerns the euro zone financial crisis was deepening.

Base metals prices were down for the third-straight session, led by a 5 percent drop in copper and in aluminum, which tumbled to a 17-month low.

In precious metals, gold fell below its 200-day moving average <GOL/> - a key technical support it had held for nearly three years - helping to send the index's heavily weighted materials sector down more than 3 percent as miners worried about the impact a slowdown in Europe would have on demand.

"That's exactly what you'd expect in this kind of environment where commodities are selling off and there's a flight from cyclical-type sectors," said Robert Kavcic, an economist with BMO Capital Markets.

Barrick Gold (ABX.TO: Quote) led the sector's losses, falling 3.8 percent to C$46.47.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended down 216.89 points, or 1.8 percent, at 11,543.05. It was its biggest one-day drop since November 23.

Record-high borrowing costs for Italy roiled the market early as yields on Italian 10-year bonds rose above 7 percent, a level that had sparked bailouts for fellow euro zone members Ireland, Greece and Portugal.

Italian five-year bond yields hit a euro-era record of 6.47 percent at auction, stoking concerns that Europe's third-largest economy could default on its debt like Greece, but be too big to bail out.   Continued...