CANADA STOCKS-TSX dives to 1-week low on euro zone worries
* TSX tumbles 191.95 points, or 1.44 percent, to 13,179.75
* Biggest 1-day drop since June 6
* All 10 of the index's main groups fall
* Italy's debt ratio sparks euro zone contagion fears (Adds details)
TORONTO, July 11 (Reuters) - Toronto's main stock index closed at its lowest level in more than a week on Monday, dragged down by fears that the euro zone debt crisis could intensify and by weaker oil prices.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE tumbled 191.95 points, or 1.44 percent, to 13,179.75, with all of its 10 main index sectors dropping. It was the index's biggest one-day fall since June 6, when it fell 1.47 percent.
Six index sectors dropped more than 1 percent, and one of the heftiest groups, oil and gas, sagged 2.6 percent. The smallest decline was in the telecoms group, which was down 0.8 percent.
The slide followed a path set by markets around the world, which fell on worries that Italy -- the euro zone's third-largest economy -- could be the next casualty of the region's debt crisis. Italy has the euro zone's highest sovereign debt ratio relative to its economy after Greece. [MKTS/GLOB]
"There's more concern the European debt crisis might actually spread out to bigger countries," said Marcus Xu, director of equity investments at Genus Capital Management in Vancouver.
"When you talk about countries like Spain or Italy, they're huge, so if they have a government debt crisis...or even a risk of default, that's stepping it up to a whole new level. Any kind of a rescue package is going to be extremely hard to obtain for those countries."
Oil and gas companies were led lower by Suncor Energy (SU.TO: Quote), the index's most influential decliner, down 2.52 percent at C$38.30. Canadian Natural Resources (CNQ.TO: Quote) followed with a 2.45 percent drop to C$39.37.
Energy shares, which make up roughly a quarter of the index, were hit by cooling oil prices, which fell on the European debt fears and on a drop in Chinese crude imports. [O/R]
The Chinese data added to global pressures weighing on riskier assets. The weak crude imports data, along with inflation that accelerated to a three-year high in China, raised the probability of more monetary tightening, which would slow the economy and growth in oil demand.
In reaction to the fears of an economic slowdown, gold prices rose in a flight to safety, spurring minor gains for gold-mining issues in Toronto. Goldcorp (G.TO: Quote) gained 0.76 percent to C$48.83, while Yamana Gold (YRI.TO: Quote) rose 1.26 percent to C$12.05.
Barry Schwartz, vice-president and portfolio manager at Baskin Financial Services, said that second-quarter earnings from the United States could provide some market direction later in the week, but that global concerns would stay front and center.
"People are focusing on these macro issues," he said. "So I would expect markets to stay skittish throughout the whole summer. Investors have to live with the volatility."
($1=$0.97 Canadian) (Reporting by Ka Yan Ng and Solarina Ho; editing by Peter Galloway)
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