CANADA STOCKS-TSX hits 4-year low as banks feel heat

Wed Nov 19, 2008 5:20pm EST
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*TSX closes at lowest level since September 2004

*Financials lead index lower, down 5 percent

*Scotiabank down 5 percent after writedown warning (Adds quotes, details)

By Jennifer Kwan

TORONTO, Nov 19 (Reuters) - Toronto Stock Exchange's main index sank to its lowest level in four years on Wednesday in a broad selloff led by key resource and financials issues on gloomy news from the banking sector.

Financials, which comprise about one third of the index's total weighting, slid 4.9 percent after Bank of Nova Scotia (BNS.TO: Quote) said late on Tuesday it would take a C$890 million pretax charge in the fourth quarter because of sliding securities valuations in volatile markets. [ID:nN19332518]

The Scotiabank warning raised questions about how much other Canadian banks will have to write down to account for their exposure to troubled assets. Scotiabank is set to kick off Canadian banks' earnings season on Dec. 2.

"There's still writedowns going on so people are wondering where this financial crisis is going to end," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd., in Calgary.

"What everybody is focusing on now is not so much the writedowns from the initial phases of what's happened with the mortgage markets. They're looking at phase 2, the losses in consumer loans, commercial and business loans."   Continued...