UPDATE 3-Toronto stocks plunge on recession worries

Mon Oct 6, 2008 4:57pm EDT
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* Oil and gas sector falls 8 pct, leads market tumble

* Financial group declines after European selloff (Updates numbers, adds quotes and details)

By Cameron French

TORONTO, Oct 6 (Reuters) - The Toronto Stock Exchange's main index dropped more than 5 percent on Monday, at one point recording its biggest intraday loss since Black Monday in 1987, as signs that the financial crisis was spreading to European banks sent investors in several markets running for the exits.

Worries of a global recession sent oil prices tumbling, leading to an 9.4 percent drop for the market's energy sector, which was the weakest of the 10 TSX subgroups, all of which finished in the red.

"Clearly you have motivated selling. Whether it be margin calls, whether it be hedge fund activity or whether it just be general investor nervousness given that there are a lot of imponderables out there making people quite nervous," said Irwin Michael, portfolio manager at ABC Funds.

The S&P/TSX composite index .GSPTSE ended down 572.92 points, or 5.3 percent, at 10,230.43.

Stocks fell hard right off the open as the emergency rescue of two big European banks and a move by several European governments to guarantee bank deposits ignited fears of a global recession.

This pulled oil prices below $90 a barrel for the first time since February, hammering shares of Nexen Inc NXY.TO, which fell 13.8 percent to C$18.18, and Suncor Energy (SU.TO: Quote), which ended down 13.6 percent at C$31.50.   Continued...