CANADA STOCKS-TSX sinks as global economic clouds gather

Tue Oct 23, 2012 1:34pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* TSX drops as much as 2.12 percent
    * Down 1.54 pct at 12,213.01 at midday
    * Energy down 2.4 pct, materials off 2.23 pct
    * RBC, Suncor, CNQ most influential decliners

    By Solarina Ho and John Tilak
    TORONTO, Oct 23 (Reuters) - Canada's main stock index
tumbled as much as 2 percent on Tuesday as a credit downgrade of
five Spanish regions and bearish U.S. corporate forecasts sent
energy and mining stocks sharply lower and revived fears of a
global economic meltdown.
    Energy stocks, which had been hit hard on Monday, fell 2.4
percent. Suncor Energy, one of the most heavily weighted
decliners, dropped 2.79 percent to C$32.45. Fellow oil producer
Canadian Natural Resources fell 3.8 percent to C$29.60.
    Financial stocks, led by the Royal Bank of Canada,
fell in sympathy with U.S. bank stocks.
    "It's a pretty ugly day. Just about everything that could go
wrong is going wrong," said John Kinsey, portfolio manager at
Caldwell Securities Ltd.
    At midday, the Toronto Stock Exchange's S&P/TSX composite
index was down 1.54 percent, or 190.53 points, at
12,213.01. It had fallen as much as 2.12 percent to 12,141.19
earlier in the day.
    Oil and gas companies fell sharply on Monday after Canada's 
weekend decision to block Malaysian state oil firm Petronas's
C$5.17 billion ($5.21 billion) bid for Progress Energy Resources
Corp, raising concerns the government might also veto
state-owned Chinese company CNOOC's C$15.1 billion takeover bid
for oil producer Nexen Inc.
    On Tuesday, lower oil prices also weighed on energy shares
as investors focused on the fragile world economy and its impact
on demand for oil, copper and other commodities.
    The Toronto index's resource sectors also tracked bullion
and copper prices, which both hit six-week lows.
    The index's materials group, home to miners, slid 2.23
percent. Goldcorp Inc was down 1.8 percent at C$42.60.
    All 10 of the TSX index's 10 main groups were negative, with
nine down 1 percent or more. Only seven stocks on the index eked
out gains.
    Soft earnings outlooks from major U.S. companies like DuPont
, 3M <MMM.N and United Technologies fueled worries
over the economic health the United States, Canada's largest
trading partner.   
    "The mood in the United States has been pretty black.
Everything is red across the board," said John Ing, president of
Maison Placements Canada. 
     Canadian National Railway was down 1.1 percent, at
C$86.14. The rail operator posted a modest increase in quarterly
profit on Monday as revenues climbed for all its business
segments, and affirmed its full-year forecast despite its
caution over the economy. 
    The financial sector, the index's biggest group, was down
1.6 percent, led by Royal Bank of Canada, the decliner
with the biggest impact on the index.
    RBC, which said on Tuesday it agreed to buy the Canadian
auto finance and deposit business of Ally Financial for $4.1
billion, dropped 2.05 percent to C$56.81. 
    Toronto-Dominion Bank was down 1.41 percent at
C$81.75. The bank agreed to buy Target Corp's credit
card portfolio. 
    Weakness in U.S. bank shares has spilled over to Canadian
banks, said Kinsey, saying that Canadian bank stocks "were due
for a correction. Maybe this is it."
    The financial, energy and materials groups make up roughly
75 percent of the index.