UPDATE 1-Toronto stocks drop with battered financials

Thu Mar 13, 2008 10:19am EDT
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(Adds details, analyst's comments)

By Jonathan Spicer

TORONTO, March 13 (Reuters) - The Toronto Stock Exchange's main index dropped sharply on Thursday morning, swept lower as fears heightened that a slowing U.S. economy will harm other world economies more than previously expected.

Financial stocks, including Canada's biggest banks, led the fall as the key index added to losses recorded in the previous session. Energy stocks also declined despite a record-breaking run in crude oil.

The drop would have been more severe if not for the TSX gold-mining subsector, which was up 1.7 percent on the back of bullion futures that touched $1,000 an ounce in early commodities trade.

"There's an enormous amount of pessimism out there -- I've never heard people as bearish on the market as they have been in the last little while," said Bruce Latimer, a trader at Dundee Securities in Toronto.

The S&P/TSX composite index .GSPTSE was down 127.08 points, or 1 percent, at 13,170.27 in morning action.

The index's two biggest sectors, financials and energy, were down 1.7 percent and 1.2 percent respectively. Financial issues are down more than 7 percent so far this month, and have fallen more than 14 percent so far this year.

"Historically, people have always looked to financials to lead us out of these scenarios, and I just don't see that happening over the next few days," Latimer said.   Continued...