UPDATE 2-Toronto stock index drops 200 points on bank woes

Tue Mar 4, 2008 12:23pm EST
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TORONTO, March 4 (Reuters) - Disappointing bank results, general worries over the U.S. economy and retreating commodities sent Toronto stock investors fleeing for the exits on Tuesday.

By late morning, the Toronto Stock Exchange's main S&P/TSX composite index .GSPTSE was down 200.64 points, or 1.5 percent, at 13,343.74.

All 10 of the TSX index's 10 main groups were lower, led down by a 2.2 percent drop in the materials group and a 1.1 percent fall in energy shares. The heavily weighted financial group was down 1.9 percent.

Financial shares slipped on disappointing results from two of Canada's big banks.

Bank of Montreal (BMO.TO: Quote) dropped C$1.63 to C$46.73, while Bank of Nova Scotia (BNS.TO: Quote) fell C$1.44 to C$45.06.

Bank of Montreal's first-quarter earnings fell 27 percent as it took writedowns of C$362 million after tax for trading and valuation-related losses, and made a higher allowance for credit losses.

Bank of Nova Scotia said its first-quarter earnings dropped 18 percent due to substantial volatility in global financial markets.

Also sparking worries in the banking sector were comments from Gulf investment agency Dubai International Capital, which said on Tuesday that it would take "a lot more money" to rescue Citigroup Inc (C.N: Quote) following investments from Abu Dhabi, Kuwait and Saudi Arabia's Prince Alwaleed.

Citigroup suffered a record $9.83 billion fourth-quarter loss tied mainly to mortgage writedowns.   Continued...