Toronto stocks stung by credit woes, resources
TORONTO (Reuters) - The Toronto Stock Exchange's main index saw its biggest decline in more than a month on Monday as it suffered the double whammy of weak resource issues and further worries over the global credit crisis.
Taking its cue from international markets, the S&P/TSX composite index skidded more than 300 points immediately after the opening bell in a steep selloff spurred by the purchase of Bear Stearns BSC.N by JPMorgan Chase (JPM.N: Quote) for the fire sale price of $2 a share.
Worries over how deeply a stumbling U.S. economy will infect the rest of the world and whether a slowdown will slash global demand for resources drove Toronto's heavyweight energy and financial sectors down 2.8 percent and 2.5 percent respectively.
Shares of banks and resource companies were among the biggest weights on the index, with National Bank of Canada NA.TO falling C$1.54, or 3.4 percent, to C$44.39, and Canadian Natural Resources (CNQ.TO: Quote) down C$3.07, or 4.2 percent, at C$69.65.
The energy sector was also hurt by a decline in the price of oil, which retreated $4.53 to $105.68 a barrel, while investors traded in futures in favor of cash.
The S&P/TSX composite index .GSPTSE closed down 300.69 points, or 2.27 percent, at 12,952.15 with all but one of its 10 main groups negative. The index managed to gain back some losses after falling by more than 400 points in the afternoon.
"The real concern obviously is what else is happening," said Brian Pow, vice president, research and equity analyst at Acumen Capital Partners, in Calgary, Alberta.
"Bear Stearns has been around for a long time. It went through the Depression and recovered, and when you have (JPMorgan) come in and offer what they did, considering where the stock was trading, just tells you there's a lot going on behind the scenes that most investors can't see."
The materials sector, home to resource shares, tumbled on worries over global demand, falling 1.8 percent. Potash Corp of Saskatchewan POT.TO fell C$3.69, or 2.3 percent, to C$154.45 while Inmet Mining IMN.TO was off C$3.83, or 4.5 percent, at C$81.71. Continued...