UPDATE 2-Toronto stocks dive as investors sour on U.S.

Thu Jan 10, 2008 11:53am EST
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(Updates with analyst comments, details)

By Jonathan Spicer

TORONTO Jan 10 (Reuters) - The Toronto Stock Exchange's main index was down more than 115 points on Thursday morning as more clouds gathered over the U.S. economic landscape.

Investors cashed in equities as doubts grew about U.S. demand for commodities, which are key indicators for the resource-heavy Toronto index.

Energy and materials stocks followed the prices of oil and base metals lower, while financial issues were undercut by yet another profit warning by a U.S. financial institution.

"The mindset that managers had six months ago is substantially different than the mindset they have now. There are just too many unknowns ... so cash is a nice thing to have," said Rick Hutcheon, president and chief operating officer at RKH Investments.

The S&P/TSX composite index .GSPTSE was down 116.62 points, or 0.9 percent, at 13,463.32 with all but one of its 10 main groups in the red. The TSX fell as much as 142 points shortly after trading began.

The financial sector, which has dropped in five of the six sessions this year, slid 0.5 percent after Capital One Financial Corp (COF.N: Quote), a U.S. credit card issuer and banking firm, issued a profit warning that fueled more worry about the ongoing credit crisis.

"We're a little bit insulated from some of these overarching company-specific issues in the United States, but it's coloring everybody's perceptions of stability and growth prospects," said Hutcheon.   Continued...