4 Min Read
* Nortel plunges 69 pct, files for bankruptcy protection
* Media companies post mixed results, outlook gloomy
* Nine of 10 sectors drop, consumer staples the exception
* Lower oil prices contribute to index's latest slide
* TSX down 3.3 percent on the year after strong start (Adds details, analysts' comments)
By Ka Yan Ng
TORONTO, Jan 14 (Reuters) - Toronto's main stock index fell 3.1 percent on Wednesday as jitters about upcoming corporate earnings and the state of the global economy weighed on sentiment, while Nortel Networks NT.TO shares dropped on news that it has filed for bankruptcy protection.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 273.19 points, or 3.1 percent, at 8,688.36. Earlier, it fell as low as 8,608.63, a loss of 3.9 percent, marking its lowest level since Dec. 30.
After charging out of the gate in 2009 with a string of solid gains that had the index up 5.76 percent last week, a few losing sessions, mostly at the hand of lower oil prices, have now left the market down 3.3 percent on the year.
Nortel shares, easily the most active issue on the index, fell as much as 79 percent to 8 Canadian cents as investors reacted to news ahead of the market open that the company had filed for bankruptcy protection. [ID:nN14442895] Nortel managed to claw back a small portion of its massive selloff, finishing down 69 percent at 12 Canadian cents.
Canadian media companies added to worries about the outlook for corporate profits after Canwest Global Communications CGS.TO and Corus Entertainment (CJRb.TO) said they expected to feel the impact of a slowing economy on advertising spending. [ID:nN14441712]
Canwest closed down 35 percent at 52 Canadian cents, while Corus lost 3.2 percent to finish at C$12.
But Cogeco Cable (CCA.TO) bucked the trend, up 2.5 percent at C$33 as it largely escaped the impact of a souring economy and posted a stronger quarterly profit helped by growth in its Canadian operations.
"Earnings estimates for a number of companies are still fairly optimistic," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.
"The reason the markets are acting quite negatively to those earnings reports is that companies are not only failing to beat estimates but many of them are forecasting a gloomy outlook for this year and that really hasn't been factored into the earnings estimates here yet."
Nine of the index's main 10 groups were lower. The exception was a 0.1 percent bump higher in the consumer staples group despite U.S. retail sales data that pointed to an intensifying recession.
Heavyweight financial, energy and materials shares were the key drivers behind the slide in the index, which relinquished all of Tuesday's 168-point gain minutes after the open.
"People are just reluctant to invest in this environment," said Bruce Latimer, a trader at Dundee Securities.
"Right now there are just not a lot of reasons for people to jump in the market, especially if they are people who have done it previously and it didn't work in their favor."
The financial services sector, which accounts for about 33 percent of the index and includes shares of Canadian banks and insurance companies, fell 3 percent.
Oil prices slipped back to just above $37 a barrel on nagging concerns about demand due to the weak state of the global economy.
$1=$1.24 Canadian Additional reporting by Natalie Armstrong and Frank Pingue; editing by Peter Galloway