*Energy down 4.5 pct, materials drop 4.9 pct
*Teck sinks 20 pct, says no plan to issue equity
*Cameco sags after higher profit, says to review projects
*CIBC World Markets says market could be at bottom (Adds analyst’s comment, details)
By Jennifer Kwan
TORONTO, Nov 11 (Reuters) - The Toronto Stock Exchange’s main index fell broadly on Tuesday, led down by a drop in the energy and materials sectors as commodity prices were pressured by concerns the economic downturn would hit demand.
Investor concern about the impact an economic decline would have on oil demand helped to push the price of crude to $59.33 a barrel [ID:nT244407], while a firmer U.S. dollar pressured gold and base metals prices. [ID:nN11550829] For more details, see: [ID:nN11578709]
The benchmark index’s energy sector fell 4.5 percent, and the materials group dropped 4.9 percent.
Heavily-weighted stocks that helped pull the index lower included EnCana Corp (ECA.TO), down 3.5 percent at C$56.94, Canadian Natural Resources (CNQ.TO), which sank 7 percent to C$53.46, and Manulife Financial (MFC.TO), which dropped 3.4 percent to C$25.75.
“It’s weaker demand anticipated from developing countries and Europe and the States, and that’s going to have a negative affect on commodities in general,” said Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.
Teck Cominco TCKb.TO, the most heavily-traded stock on the TSX, tumbled 20.1 percent to C$8.75. The company -- responding to an apparent market rumor -- said it does not plan to issue equity to pay off debt incurred in its takeover of Fording Canadian Coal Trust. [ID:nN11538747]
The S&P/TSX composite index .GSPTSE was down 264.80 points, or 2.73 percent, at 9,424.00, with all but one of its 10 main sectors in negative territory. The consumer staples group eked out a 0.2 percent gain.
The slump in the energy and materials groups reversed gains made on Monday when both sectors climbed on China’s plan to pump $586 billion into its economy. But the euphoria related to the China stimulus plan was short-lived as world stock markets returned to focus on economic and corporate outlook concerns.
Still, news of the stimulus plan was a source of optimism for CIBC World Markets, which suggested on Tuesday that battered Canadian equity markets may have reached a bottom and could get through the rest of the year without another meltdown, even though slumping commodities will keep the market from enjoying a sustained rally. [ID:nN11516966]
Stocks suffered a punishing blow in October with the key index down 16.9 percent and the small-cap Venture composite index .SPCNDX down 35 percent.
Also fueling the negative market sentiment was continued concern “that we’re certainly nowhere near stable ground” as far as the financial services sector is concerned, said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc.
“There’s just no sense of positive direction that the market would need to form a bottom,” he said.
The world’s top uranium producer, Cameco (CCO.TO), tumbled 5.8 percent to C$18.60. Earlier, it reported a jump in quarterly profit but said it would look to cut costs and defer projects amid the global credit crunch. [ID:nN11304417]
ACE Aviation Holdings ACEa.TO, the parent company of Air Canada ACa.TO, reported a quarterly loss, hurt mainly by high fuel prices, and it said it is exploring options for its stake in Air Canada. [ID:nN10481115]. ACE was down 13.7 percent at C$3.85.
On Wall Street, the Dow Jones industrial average .DJI fell 176.58 points, or 1.99 percent, to 8,693.96, while the Nasdaq Composite Index .IXIC ended down 35.84 points, or 2.22 percent, at 1,580.90. ($1=$1.21 Canadian) (Reporting by Jennifer Kwan; editing by Peter Galloway)