CANADA STOCKS-TSX sinks nearly 2 percent on Europe fears
* TSX down 216.14 points, 1.8 pct, at 11,931.14 * Biggest drop for index in more since December TORONTO, April 23 (Reuters) - Toronto's main stock index tumbled nearly 2 percent in early Monday trade, its biggest drop in more than four months as weak European data and political tension in France and the Netherlands heightened concerns about the euro zone's ability to tackle its debt crisis. All 10 sectors were down sharply. Prices for key commodities oil, gold and copper also sold off, weighing heavily on Canada's resource-heavy market. The most influential movers on the downside included Barrick Gold, down almost 3 percent to C$38.83, Goldcorp Inc , down 3.7 percent to C$39.52 and Toronto-Dominion Bank , off 1.6 percent to C$82.60. "The political developments in Europe have highlighted a pushback against austerity measures and the data out of the euro zone disappointed and overshadowed what was an improvement in China's flash PMI," said Fergal Smith, managing market strategist at Action Economics. The economic outlook for Europe was hurt by poor flash Purchasing Manager's Indexes (PMIs) for April, which are a guide to future activity. The reports for the euro zone, Germany and France pointed to a much faster rate of economic contraction across the debt-laden region than had been expected. The gloomier view increased as Dutch Prime Minister Mark Rutte said on Monday he has tendered his cabinet's resignation to the Dutch Queen, adding that she will consider it and has asked in the meantime for the government to keep doing whatever was in the country's interest. The Dutch government, a close ally to Germany, has been calling for tougher austerity measures to fight the crisis. Investors also were absorbing the implications of the victory in the first round of France's presidential poll of Socialist Francois Hollande, who has promised to renegotiate a European budget pact. At 10:36 a.m. (1436 GMT), the Toronto Stock Exchange's S&P/TSX composite index was down 216.14 points, or 1.78 percent, to 11,931.14. Earlier, the TSX hit as low as 11,919.13, its lowest level in nearly two weeks and the index's steepest drop since December. Smith said the TSX was now targeting a test of the April low of 11,869 and the 50 percent retracement of the October-March rally that comes in at 11,818, for further support. On the brighter side, a private sector purchasing managers survey from China showed factories posted their best performance this year as a measure of new business rose from multi-month lows, though overall activity still contracted for a sixth successive month. "Taken in isolation, the Chinese PMI would have been constructive," added Smith. "Our view is it is consistent with a soft landing in China ... on balance it still maintains hope for policy easing in China as well."
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