UPDATE 1-Bank shares roil Toronto stock market

Tue Jan 15, 2008 10:34am EST
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TORONTO Jan 15 (Reuters) - Toronto's main stock market index dropped more than 200 points on Tuesday amid falling commodities shares and worries over the health of the North American banking shares and another writedown at Canadian Imperial Bank of Commerce (CM.TO: Quote).

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 227.63 points, or 1.7 percent, at 13,470.65.

All 10 of the TSX index's main groups were lower, led by a 2.5 percent drop in the influential energy group and a 1.8 percent fall in the heavily weighted financial group. The commodity heavy materials group was down 1.3 percent.

These three groups account for more than 75 percent of the overall weighting of the market.

Bank stocks were rattled by bleak news on both sides of the border.

CIBC said on Monday it will take almost $2.5 billion in pretax writedowns related to the U.S. subprime mortgage crisis, and raise about C$2.75 billion ($2.70 billion) in stock sales to rebuild its balance sheet.

CIBC, Canada's fifth-largest bank, said it will take a $2 billion pretax writedown in its financial first quarter related to the subprime mortgage hedge protection it bought from ACA Financial Guaranty Corp.

As well, it plans to sell chunks of shares to institutional investors at C$65.26 and C$67.05 per share. Shares of CIBC dropped C$2.07 to C$70.00.   Continued...