TORONTO (Reuters) - Toronto's main stock index skidded to its lowest level in nearly seven weeks on Tuesday, rattled by fears that the global growth outlook is darkening and Greece may not be able to complete a major debt restructuring deal.
The resource-heavy index joined global markets in a sharp retreat on concerns about the outlook for the global economy. The European Union said on Tuesday a collapse in household spending, exports and manufacturing deflated the euro zone's economy in the final months of 2011.
Data also showed Brazil's gross domestic product expanded by a meager 2.7 percent in 2011, adding to concerns after China cut its growth outlook the day before. Expected growth in emerging markets has been a major impetus for recent equity gains.
The global jitters helped send the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE down 225.32 points, or 1.8 percent - its steepest one-day percentage loss so far this year - to 12,298.63. Earlier, it hit 12,249.85, its weakest level since January 18.
Nine of the TSX's 10 main sectors finished lower, with consumer staples unchanged.
The big materials and energy sectors fell 2.3 percent and 2.8 percent respectively, as commodity prices slid on concerns about the demand outlook. <O/R> <METL/>
Bob Gorman, chief portfolio strategist at TD Waterhouse, said the move by China sparked the selloff.
"The key data point yesterday was China's indication that growth this year will probably slip from 8 percent to 7.5 percent," he said.
"The emerging markets such as China and India are the sources of incremental demand for resources. As a result, that backs up very quickly into the resource prices and their stocks."
Gorman said the strength in the U.S. dollar also contributed to weaker commodity prices. A stronger greenback makes commodities priced in U.S. dollars more expensive for holders of other currencies.
Fears also intensified about whether Greece will be able to complete a private-sector debt swap by late Thursday so it can receive a 130 billion euro bailout and meet bond repayments due by March 20, which would allow it to avoid default.
Those concerns helped to push global equities to their biggest declines in three months, while the euro slumped against the greenback.
Ron Meisels, president and technical analyst at Phases & Cycles, said the Toronto index fell below its 21-day day moving average but the market is not in any danger of turning significantly bearish.
"It's both a technical selloff and some selloff due to some people's worry that there's going to be some bad news coming out of Europe," said Meisels.
"We're not in any kind of danger whatsoever, in my opinion, about this market going bearish or are we going to have a new bear market or we're going to collapse here. This is not what's happening."
The market has climbed about 11 percent since mid-December and it's perfectly natural to see some profit-taking, he added.
In company news, Bank of Nova Scotia (BNS.TO) closed down 1.4 percent at C$52.94. First-quarter earnings at the country's third-biggest bank rose, but were at best in line with expectation, making it the first of the big banks to not beat expectations this quarter.
Aecon Group Inc (ARE.TO) rose 1.3 percent to C$12.31, a rare bright spot in the sharply lower Toronto market. Canada's biggest construction company reported quarterly earnings that easily beat expectations and forecast 2012 would be even stronger.
Editing by Rob Wilson