Financials, resources lead Toronto stock plunge
By Leah Schnurr
TORONTO (Reuters) - The Toronto Stock Exchange's main index plunged close to 400 points on Tuesday, in its biggest slide in more than five months, amid more writedowns in the banking sector.
Heightened fears of a U.S. recession, declining commodity prices and massive writedowns from Canadian Imperial Bank of Commerce (CM.TO: Quote) and U.S. bank Citigroup (C.N: Quote) helped the index erase all its gains made since the end of November.
The S&P/TSX composite index .GSPTSE closed down 381.50 points, or 2.79 percent, at 13,316.78, with all 10 of its main sectors lower.
CIBC, Canada's fifth-biggest bank, shed C$2.07, or 2.9 percent, to C$70.00 the day after it said it would issue C$2.75 billion in new shares and take additional pretax writedowns of $2.46 billion for U.S. subprime mortgage-related securities.
The financial sector, which fell 2.3 percent, was also stung by Citigroup's record $9.83 billion quarterly loss.
The biggest U.S. bank also said it would raise $14.5 billion in new capital, cut its dividend and slash 4.200 jobs to shore up its balance sheet.
"The financial sector has historically been one of the linchpins of the Canadian market," said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario. "And obviously that faith is being shaken right now."
"The fact that (CIBC) had to issue as much stock at as deep a discount to the market, after the market had already pulled off that much, tells you the degree to which they needed the money," said Chandler. Continued...