CANADA STOCKS-TSX falls on financials, but resources up

Tue Dec 9, 2008 12:16pm EST
 
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* Financials slide after RBC announces share issue

* Central bank cuts overnight rate 75 bps

* Oils, materials rise on optimism over U.S. stimulus (Adds quotes, details)

By Jennifer Kwan

TORONTO, Dec 9 (Reuters) - Toronto's main stock index sank late on Tuesday morning in choppy action as strength in resource issues and a big rate cut by the Bank of Canada were offset by weakness in financials.

Royal Bank of Canada RY.TO, one of the most heavily traded stocks, fell 5.7 percent to C$35.37 after it said after the market close on Monday that it plans to issue up to C$2.3 billion in common shares to beef up its capital ratio. [ID:nN08525759] The broader financial sector lost 3.8 percent.

"Every second week there's a new bank or new company that raises capital through a share offering because they can't through bonds or because they feel it's cheaper for them to offer shares," said Francis Campeau, a broker at MF Global Canada, in Montreal.

"This is not a positive in the long run, especially for equities as there is more and more equity supply."

Shortly after 11:45 a.m. (1645 GMT), the S&P/TSX composite index .GSPTSE was down 74.75 points, or 0.87 percent, at 8,492.37, with seven of the index's main groups lower.   Continued...