UPDATE 1-Toronto stock index sinks as oil drops

Fri Oct 10, 2008 10:42am EDT
 
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*Energy shares drop as oil falls to $82 on recession fears

*Huge Sept. job creation shrugged off

*Ottawa's C$25 bln mortgage plan also dismissed

(Adds details)

TORONTO, Oct 10 (Reuters) - The Toronto Stock Exchange's main index dropped on Friday morning as oil slid to $82 a barrel on fears demand will shrink if the world economy goes into recession, pulling down energy shares.

An announcement that Canada will buy up to C$25 billion in insurance mortgages to free up the "scarcity" of private sector lending [ID:nN10361962] and a surprise jump in September jobs data did not help cheer the market. [ID:nN10365080]

Leading the way down was the heavily-weighted oil and gas sector, which sank 3.6 percent as oil tumbled more than 5 percent to around $82 a barrel on persistent worries that demand for the commodity would falter on fears of a global recession. [ID:nT134769].

Shortly before 10:30 a.m., the S&P/TSX composite index .GSPTSE was down 118.69 points, or 1.24 percent, at 9,481.49, with seven of its 10 main groups lower. Earlier, the benchmark index plummeted more than 5 percent.

The financial services sector rose 0.2 percent with Royal Bank of Canada (RY.TO: Quote), up 3 percent to C$42.70.   Continued...