CANADA STOCKS-TSX dives, punished by oil, GDP data, AIG loss

Mon Mar 2, 2009 5:11pm EST
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* Energy sector down 8.3 pct, financials drop 4.5 pct

* TSX comes within 24 points of 5-1/2 year low

* AIG's big loss rattles financial shares (Adds comments and details)

By Frank Pingue

TORONTO, March 2 (Reuters) - Toronto's main stock index joined a global equity selloff on Monday, falling more than 5 percent for its biggest one-day drop in three months, hit by weaker oil prices and data that showed the Canadian economy shrank sharply in the fourth quarter.

Heavily weighted financial shares were a major drag on the index as news that U.S. insurer AIG (AIG.N: Quote) posted a record quarterly loss fueled fears that the global financial crisis is worsening.

That sentiment dragged shares of insurer Manulife Financial (MFC.TO: Quote) down 10 percent to C$11.58, while Bank of Nova Scotia (BNS.TO: Quote) tumbled 5.85 percent to C$27.03. The Toronto Stock Exchange's financial index ended down 4.5 percent.

"The market is down over worries about global growth as well as continued worries about what's happening with financial services in the U.S. and how much worse it will get, which is affecting financials everywhere," said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.

"But it's clearly more of a reaction than I expected since I thought people were pretty pessimistic already."   Continued...