UPDATE 3-Toronto stock index sinks below 9,000 level

Fri Oct 10, 2008 3:12pm EDT
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* Energy stocks tumble as oil falls below $78

* Strong September jobs numbers fail to lift buoy market

* Ottawa's C$25 bln mortgage plan shrugged off (Adds analyst comments, details, updates figures)

TORONTO, Oct 10 (Reuters) - The Toronto Stock Exchange's main index plunged on Friday afternoon, slipping below 9,000 for the first time in more than three years, as commodity issues fell along with underlying prices on deepening fears the world economy will go into recession.

An announcement that Canada will buy up to C$25 billion in mortgage-backed securities to try to cushion banks from the global financial crisis [ID:nN10361962] and a surprise jump in September jobs data did not help lift the market mood.[ID:nN10365080]

Leading the way down was the heavily weighted oil and gas sector, which sank 11.9 percent as oil tumbled 10 percent to below $78 a barrel on persistent fears that demand would falter amid a global recession. [ID:nT134769].

"Nobody, at the moment, is believing that any of the measure that are being taken are enough, soon enough," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd in Calgary.

"The market clearly has absolutely no confidence in the (financial) system. It's very hard to sit here and say what will change the collective psychology of an entire financial market that believes it's just going to get worse."

In these rocky economic times, Toronto is taking its direction from European and U.S. markets, which are still "spooked," said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc.   Continued...