CANADA STOCKS-TSX falls on financials; shrugs off election risk

Tue Sep 1, 2009 3:15pm EDT
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* TSX off 164.18 points, or 1.51 percent, at 10,704.03

* Canada Liberals will vote against government

* Financials, down 2.7 pct, leads TSX lower (Updates to midafternoon)

TORONTO, Sept 1 (Reuters) - Toronto's main stock index sank on Tuesday, led by weakness in the weighty financial sector as investors locked in profits following a surprisingly strong earnings period for most of Canada's big banks last week.

The market largely shrugged off news that the country's official opposition Liberal Party will no longer support the minority Conservative government of Prime Minister Stephen Harper. [ID:nN01496127]

Influential movers on the downside included Royal Bank of Canada (RY.TO: Quote), down 1.8 percent at C$55.44, and Bank of Nova Scotia (BNS.TO: Quote), which dropped 3.7 percent to C$44.17.

The broader financial sector, down 2.7 percent, led the Toronto index lower. The financials index saw strong gains last week when most of Canada's big banks reported stronger-than-expected results.

"There are likely some investors out there that are questioning near term valuations because the stocks are pricing in heavy expectations going forward," said Gareth Watson, Canadian equity advisor at ScotiaMcLeod.

"I wouldn't be surprised that you're just seeing some profit taking from last week's strong performance."   Continued...