UPDATE 2-Toronto stocks slump amid AIG worries, oil retreat

Tue Sep 16, 2008 11:47am EDT
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* TSX composite down more than 120 points

* Financials off 1.6 percent amid AIG woes

* Oil slips as financial turmoil seen hitting demand (Adds details)

TORONTO, Sept 16 (Reuters) - The Toronto Stock Exchange's main index tumbled another 1 percent on Tuesday, as investors worried over the prospects for struggling U.S. insurer American International Group AIG.N and oil prices continued their retreat.

The TSX financial services sector slipped 1.6 percent amid concerns about AIG's ability to secure fresh capital, which added to the worries already battering world markets.

Canadian Imperial Bank of Commerce CM.TO was down 3 percent at C$59.29, while Royal Bank of Canada RY.TO fell 3 percent to C$466.63.

Concerns grew about spillover effects of the U.S. financial crisis after AIG's credit ratings were cut and the insurer's shares tumbled. See [ID:nN16364783].

The gloomy outlook followed Monday's market meltdown, as Lehman Brothers Holdings Inc LEH.N filed for bankruptcy protection and Merrill Lynch & Co MER.N agreed to be taken over by Bank of America Corp BAC.N. See [ID:nN13574113].

"Investors are very concerned about the possible duration of the downturn in the U.S. economy and the aftereffects that are going to be felt from the financial calamities," said Michael Sprung, president of Sprung & Co. Investment Counsel.   Continued...