* TSX down 242.14 points, or 1.74 pct, at 13,692.37
* All 10 main sectors fall
* Commodities slump on demand worries, US$ strength (Adds comments, details, background)
By Solarina Ho
TORONTO, May 3 (Reuters) - Toronto’s main stock index posted its biggest one-day drop in nearly a month on Tuesday as falling commodity prices drove resource issues deep into negative territory and led a broad-based retreat.
The drop by the TSX index mirrored a slide in the price of oil, which fell more than 2 percent, which largely overshadowed the solid victory of the business-friendly Conservatives in Monday’s federal election.
“Let’s face it, our equity markets, for the most part ... it all comes down to what these commodity prices are doing. Today, I think that’s taken over as the story,” said Gareth Watson, vice-president, investment management and research, at Richardson GMP.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE plunged 242.14 points, or 1.74 percent, to 13,692.37. That marked a two-week low and the index’s biggest one-day drop since March 10. All 10 of its main sectors fell.
During the session, the benchmark tumbled more than 2 percent to 13,618.76, its lowest point since April 18.
The energy and materials groups -- which combined make up about 50 percent of the index -- fell more than 2.7 percent each, as demand worries and a strengthening U.S. dollar sapped investor appetite for commodities. [GOL/][IO/R]
Suncor Energy (SU.TO) sank 5.59 percent to C$41.55, and was the index’s heaviest decliner even though the country’s biggest energy company reported a higher quarterly profit on Tuesday. Its drag on the index was nearly three times more than the next biggest decliner, Potash Corp (POT.TO), which was off 3.11 percent at C$51.46. [ID:nL3E7G312N]
Goldcorp (G.TO) fell 2.85 percent to C$48.69, while Barrick Gold (ABX.TO) lost 2.1 percent to C$46.25 as gold prices dropped from record highs above $1,570 an ounce on waning safe-haven buying. Silver prices also had their biggest two-day loss since December 2008.
“We’ve got the implosion of the silver and gold markets, which were clearly in a bubble territory,” said Barry Schwartz, vice-president and portfolio manager at Baskin Financial Services.
“It’s too early to say if they are being deflated or not, but there’s been erratic trading in those commodities, and those investors who rode them up are now thinking twice about what they should do next.”
The financial group sagged 1.06 percent with Manulife Financial (MFC.TO) down 4 percent to C$16.80.
Despite Tuesday’s plunge, Francis Campeau, a broker at MF Global Canada in Montreal, said the Conservative victory in Monday’s election will offer the market long-term stability.
The party won a majority in Monday’s general election and signaled it would follow a tax-cut and business-friendly agenda. [ID:nN03253899]
“By (the Conservatives) getting a clear majority in the Parliament, markets are able to handicap investment opportunities better,” said Stephen Wood, chief investment strategist for North America at Russell Investments in New York.
($1=$0.95 Canadian) (Additional reporting by Ka Yan Ng; editing by Rob Wilson)