4 Min Read
* 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. OIL, COMMODITY PRICES DRAG 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.