UPDATE 1-Toronto stocks drop 2.2 pct on U.S. financial concern
TORONTO, March 17 (Reuters) - Toronto's main stock market index plunged to its lowest level in more than a month on Monday in the wake of the fire sale purchase of Bear Stearns BSC.N by JP Morgan Chase (JPM.N: Quote) and the U.S. Federal Reserve's emergency measures on Sunday to prop up U.S. financial markets.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE fell 286.80, or 2.2 percent, to 12,966.04 after touching a six-week low of 12867.01 earlier in the session.
In a bid to stem a fast-spreading global financial crisis, the Fed made an emergency quarter-percentage-point cut to its discount rate to 3.25 percent on Sunday and expanded lending to a wider range of big financial firms.
JPMorgan will buy Bear Stearns at the fire sale price of $2 per share, well below the $30.85 a share it closed at on Friday. Shares of the fifth-largest U.S. investment bank had reached a high of $172.61 last year.
"Given the events on the weekend, what we are seeing is not a surprise. Certainly the financials are going to be crushed today," said Michael Sprung, president at Sprung and Co Investment Counsel.
"Our view so far would be to stand out of the way of the truck and don't panic."
Overall, nine of the TSX index's 10 main groups fell, with the heavily weighted financial group down 3.1 percent and the influential energy group off 2.5 percent.
The resource-heavy materials group was off just 0.5 percent, as a 1.4 percent rise in the gold subgroup helped prop up the index. Continued...