4 Min Read
* Toronto index hands back all of Wednesday's gain
* All 10 TSX sectors close in negative territory
* Bleak corporate news sparks slide in key companies
By Frank Pingue
TORONTO, Dec 11 (Reuters) - Toronto's main stock index sank nearly 3 percent on Thursday as oil and gas company EnCana Corp (ECA.TO) led a broad-based skid as it cut its capital budget, while nagging economic concerns hit financial shares.
Other drags on the market were Gildan Activewear (GIL.TO) shares, which fell after it issued a disappointing outlook, and BCE Inc (BCE.TO), whose shares fell after a C$34.8 billion leveraged buyout for the telecommunications company collapsed.
Heavily weighted financial issues, which account for about a third of the main index, fell for a third straight session on worry that a bailout plan for the U.S. auto industry might not go ahead, while concerns about the economy persisted.
The market's skid knocked it back to its lowest closing level since Monday and erased all of the 236 points it gained on Wednesday, when energy shares led a rally.
"Whenever you have a market crash like you had through October and November it takes time for the damage to heal and so you get volatility and you get bouncing around as people are still very nervous," said Julie Brough, vice president at Morgan Meighen & Associates.
"So until you get some of this volatility diminishing you won't get sustained recoveries. And since there was not really any shining news, it was easier to drift lower than higher."
The S&P/TSX composite index .GSPTSE closed down 242.10 points, or 2.8 percent, at 8,391.90, with all 10 of its subindexes lower.
EnCana shares were the main drag. They fell 6.63 percent to C$55.22 after the company slashed its 2009 capital budget by 18 percent in a bid to weather lower commodity prices and economic uncertainty.
The news, coupled with a dark mood on markets, dragged the broader energy sector down 1.8 percent, but the drop there was cushioned by a gain in oil prices of more than 10 percent.
Shares of Canada's big banks, which turned lower earlier this week when the Bank of Canada said for the first time that the economy is entering a recession, remained in a funk given the anxiety over whether the proposed U.S. auto sector bailout will go ahead.
Comments from JPMorgan Chase & Co's chief executive, who said the largest U.S. bank sees constant deterioration in credit, also weighed on the financial sector.
The derailment of the BCE deal rattled that company's shares, which finished down 4.3 percent at C$22.03.
Shares of Gildan dropped 34.6 percent to C$11.60 and were the third biggest net loser in the session as the T-shirt maker unveiled a 2009 profit forecast that was below estimates.
On Wall Street, stocks also ended lower given the dimming prospects for an automaker bailout.
The Dow Jones industrial average .DJI fell 196.33 points, or 2.24 percent, to 8,565.09, while the Nasdaq Composite Index .IXIC ended down 57.60 points, or 3.68 percent, at 1,507.88.
$1=$1.24 Canadian Editing by Peter Galloway; editing by Peter Galloway