March 13, 2008 / 2:23 PM / 10 years ago

UPDATE 1-Toronto stocks drop with battered financials

(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.

“Time, more than news, will be the catalyst we need to turn this thing around.”

Among the biggest drags were Royal Bank of Canada (RY.TO), off 72 Canadian cents at C$46.68, and Manulife Financial (MFC.TO), off 64 Canadian cents at C$35.61.

In the energy sector, Canadian Natural Resources (CNQ.TO) dipped C$1.51 to C$70.63. In the smaller information technology group, which slipped 2.3 percent, Research In Motion RIM.TO fell C$3.16 to C$97.03.

Biovail Corp BVF.TO, which reported a fourth-quarter loss earlier on Thursday, tumbled 43 Canadian cents to C$12.69. For details, see: [nN13536197]

Gold firms were alone on positive terrain as the prices of both gold futures, and spot gold -- which had not yet broke through the $1,000-an-ounce threshold -- tracked near record highs.

Barrick Gold (ABX.TO), the world’s No. 1 gold producer, climbed C$1.07 to C$51.22, while Goldcorp (G.TO), Canada’s No. 2 producer, added 83 Canadian cents to C$43.42.

$1=$0.98 Canadian Reporting by Jonathan Spicer; Editing by Peter Galloway

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