UPDATE 1-Toronto stocks fall on financials, Nortel

Wed Sep 17, 2008 10:10am EDT
 
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*Nortel sinks 29 percent after its cuts 2008 outlook

*Petro-Canada falls after it says capital costs to rise

*Oil shares drop despite bump up in prices

(Adds details)

TORONTO, Sept 17 (Reuters) - The Toronto Stock Exchange's main index fell in early action on Wednesday as fears over the health of the U.S. financial system lingered and Nortel Networks Corp NT.TO shares plunged after it cut its 2008 revenue outlook.

The S&P/TSX composite index .GSPTSE was down 88.13 points, or 0.72 percent, at 12,138.86, with eight of its 10 main groups lower. Shortly after the open, the benchmark index had fallen more than 200 points.

Technology shares sank 5 percent with Nortel down 29 percent at C$4.06 after the company cut its 2008 revenue and gross margin forecasts and said it plans another round of cost-cutting. [ID:nN17491200]

The heavily-weighted financial services sector fell 1.6 percent with Manulife Financial (MFC.TO: Quote) 3.4 percent lower at C$34.78 after it disclosed its exposure to insurer American International Group (AIG.N: Quote) late on Tuesday.

Concerns over the U.S. financial system lingered despite a U.S. government bailout plan on Tuesday for AIG, with a $85 billion loan from the New York Federal Reserve to stave off bankruptcy. For details, see [ID:nN13574113].   Continued...