January 4, 2008 / 10:28 PM / 10 years ago

UPDATE 3-Toronto stocks slump as economic worries rise

(Adds details, quotes)

By Leah Schnurr

TORONTO, Jan 4 (Reuters) - Growing worries over the prospect of a recession south of the border weighed heavily on the Toronto Stock Exchange’s main index on Friday, while resource issues retreated amid softer commodity prices.

The index tumbled immediately after the opening bell following data that showed weak U.S. job growth in December and rising unemployment.

The materials and energy sectors led the TSX lower, shedding 1.3 percent and 1.2 percent respectively, hurt by weaker gold and oil prices as well as worries that slower global growth could dampen demand for resources.

Suncor Energy (SU.TO) was down C$2.17, or 1.9 percent, at C$109.67, while Centerra Gold (CG.TO) was off 93 Canadian cents, or 6.8 percent, at C$12.73.

“The U.S. jobs numbers seem to have set everybody in a bad mood first thing this morning, and it stuck,” said Julie Brough, vice-president at Morgan Meighen & Associates.

“It increased the concerns that the U.S. would fall into a recession, which is causing weakness across the board.”

The S&P/TSX composite index .GSPTSE closed down 199.62 points, or 1.43 percent, at 13,778.58 -- its steepest decline in nearly three weeks. All of the TSX’s 10 main groups finished lower.

The financials sector was squeezed by the economic jitters, falling 1.2 percent. Canadian Imperial Bank of Commerce (CM.TO) was down C$2.05, or 2.9 percent, at C$68.00, and Bank of Montreal (BMO.TO) declined 77 Canadian cents, or 1.4 percent, to C$55.27.

“I think people are coming to terms with the fact that we may well be in a recession and prices are adjusting to reflect that,” said Michael Sprung, president of Sprung & Co. Investment Counsel.

“Our view is that, for the first half of this year, credit concerns in the market are going to continue to be the dominant scene until we start seeing the possibility of some easing in those credit problems,” said Sprung. “The idea of a more positive economic environment is moving further and further out into the future.”

The tech sector fell 2.6 percent, dragged lower by BlackBerry maker Research In Motion RIM.TO, the biggest net decliner, which sagged C$8.20, or 7.3 percent, to C$103.46.

The consumer discretionary sector was off 1.8 percent and the industrials group lost 0.8 percent.

The composite index was down 0.3 percent for the week, which was shortened by the New Year holiday. But TSX has closed higher for four out of six sessions, helped in part by record high prices for gold and oil over the last two days.

Market volume was 333 million shares worth C$6 billion. Decliners doubled advancers 1,024 to 513. The blue chip S&P/TSX 60 index .TSE60 closed down 11.67 points, or 1.43 percent, at 806.64.

The U.S. jobs numbers and fears of an economic downturn hammered stocks south of the border, sending the Nasdaq composite index .IXIC into its steepest dive in almost a year, down 98.03 points, or 3.77 percent, at 2,504.65.

The blue chip Dow Jones industrial average .DJI plunged 256.54 points, or 1.96 percent, to 12,800.18.

$1=$1.00 Canadian Editing by Rob Wilson

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