CANADA STOCKS-TSX dives on fears of deeper recession

Tue Feb 17, 2009 4:55pm EST
 
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* TSX touches lowest level in seven weeks

* Financials, down 6.4 pct, lead TSX lower

* Energy sector drops as oil slides below $35 a barrel (Adds details, quote)

TORONTO, Feb 17 (Reuters) - Toronto's main stock index sank more than 3 percent on Tuesday to its lowest level in seven weeks as resource issues slumped on falling oil and base metal prices and as reports fanned worries about a deepening global recession.

The financial services sector led the TSX lower, closing down 6.4 percent, its steepest one-day percentage loss since the beginning of December.

Heavily weighted stocks on the downside included insurer Manulife Financial (MFC.TO: Quote), down 10.6 percent to C$15.67, and Royal Bank of Canada (RY.TO: Quote), which fell 5.5 percent to C$28.15.

New concerns about the banking sector were sparked by a report from Moody's Investors Service that suggested Eastern Europe's hard-hit economies could drag Western banks into deeper trouble. [ID:nLH575804]

That added to an already gloomy tone in the sector, said Francis Campeau, broker at MF Global Canada, in Montreal, adding that there appear to be "no buying catalysts".

"Going forward, we expect banks' income to decrease," he said. "Forward earnings per share are getting repriced and current dividends are unsustainable."   Continued...