UPDATE 3-Toronto stock index drops 300 pts on recession fear

Tue Feb 5, 2008 4:39pm EST
 
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(Updates numbers, adds details, quotes)

TORONTO Feb 5 (Reuters) - In its worst session in two weeks, the Toronto Stock Exchange's main index dived on Tuesday, led lower by resource shares amid a broad selloff sparked by heightened worries of a U.S. recession.

Data from the U.S. Institute for Supply Management showed its key non-manufacturing services index dropped in January, spurring concern the slump in the U.S. housing market has infected the wider economy.

Lower commodity prices also put pressure on the resource-heavy Toronto benchmark, with the energy and materials sectors losing 2.6 percent and 2.9 percent respectively.

"I think (the ISM number) points to something that's really slowing down - call it a recession, call it a major slowdown, it doesn't matter," said Adrian Mastracci, portfolio manager and president at KCM Wealth Management Inc., in Vancouver.

The S&P/TSX composite index .GSPTSE closed down 326.21 points, or 2.46 percent, at 12,931.95 with all of its 10 main groups lower.

Suncor Energy (SU.TO: Quote) was off C$3.20, or 3.3 percent, at C$92.76, while crude oil fell more than $2 a barrel on worries that U.S. slowdown could staunch demand for energy.

The gold producers subindex tumbled 2.1 percent, as gold was hurt by a higher U.S. dollar and profit-taking. Kinross Gold (K.TO: Quote) lost 32 Canadian cents, or 1.5 percent, to C$21.05.

Elsewhere in the sector, Centerra Gold (CG.TO: Quote) fell 87 Canadian cents, or 5.7 percent, to C$14.45 amid reports that Kyrgyzstan had begun a tax-evasion investigation into the company's Kumtor mine.   Continued...