August 6, 2009 / 8:54 PM / 8 years ago

CANADA STOCKS-TSX falls hard after four days of gains

3 Min Read

* TSX down 253.56 points, or 2.3 percent, at 10,793.37

* Manulife, the top heavyweight decliner, tumbles 14.8 pct

* Financials retreat 5.6 pct (Updates to official closing numbers, adds details, quotes)

By Jennifer Kwan

TORONTO, Aug 6 (Reuters) - Toronto's main stock index sank on Thursday after four days of gains, hurt by a dividend cut by Manulife Financial (MFC.TO) as the market digested an avalanche of corporate results.

Canadian insurers were the big net loss leaders and Manulife led the way lower, tumbling 14.8 percent to C$22.36. Canada's largest insurer reported a jump in quarterly profit, handily beating analysts' expectations, but it surprised the market by chopping its dividend in half.

"If all you owned was Manulife, your income has just been cut in half," said Adrian Mastracci, portfolio manager and president at KCM Wealth Management Inc.

"That certainly sends a signal to investors that it's not all rosy out there and nothing is guaranteed. The biggest question becomes, who else is going to do something like this."

While the second quarter showed Manulife, Sun Life Financial Inc (SLF.TO) and Great West Lifeco Inc (GWO.TO) had turned the corner after last year's stock market slump hit their huge investment portfolios, they indicated they still face difficulties, including low interest rates, which hurt returns on fixed-income investments, and the need to rebuild capital. [ID:nN06313250]

The broader financials group was down 5.6 percent, with Sun Life off 12.3 percent at C$33.00 and Great West Bank sliding 9.1 percent to C$24.45.

The big energy sector fell 1 percent as oil slipped from a six-week high on weak equities and gains in the U.S. dollar. [ID:nSP359441]

The benchmark S&P/TSX composite index .GSPTSE was down 253.56 points, or 2.3 percent, at 10,793.37, finishing in the red after two days of closing higher above the 11,000-level. Six of the index's 10 main groups were lower.

Heading into Thursday, the TSX had closed higher for four straight sessions.

"The markets are probably a little ahead of themselves," said John Kinsey, portfolio manager at Caldwell Securities Ltd, of the broader market retreat.

The TSX composite, considered a leading indicator of the Canadian economy, is still up just over 40 percent from its low in March and ahead 20 percent since the start of the year.

Top gainers on Thursday included Thomson Reuters (TRI.TO), up 4.8 percent at C$36.73 [ID:nN06522055], and Tim Hortons THI.TO, which climbed 7 percent to C$31.98. [ID:nBNG219008]

The small healthcare sector soared 8.2 percent, supported by drug company Biovail BVF.TO, which rose 3.3 percent to C$15.04, after it posted a second-quarter profit. [ID:nBNG166959]

The blue chip S&P/TSX 60 index .TSE60 closed 18.85 points lower, or 2.81 percent, at 650.90.

$1=$1.08 Canadian Reporting by Jennifer Kwan, additional reporting by Ka Yan Ng; editing by Rob Wilson

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