CANADA STOCKS-TSX dives more than 2 pct on euro zone fears

Fri Sep 9, 2011 5:08pm EDT
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 * TSX falls 296.42 points, or 2.34 percent, to 12,387.54
 * Energy, financials lead decline
 By Trish Nixon
 TORONTO, Sept 9  (Reuters) - Toronto's main stock market
index tumbled along with world stocks on Friday, falling more
than 2 percent, as worries about Europe's festering debt
problems intensified.
 European Central Bank board member Juergen Stark resigned
in protest of the bank's bond-buying program, throwing into
question policymakers' ability to deal with Europe's debt
crisis, a problem that could engulf a world economy already
teetering on the brink of recession. [MKTS/GLOB]
 "All eyes are on Europe," said Elvis Picardo, strategist
and vice president of research at Global Securities in
 "We are still a few hundred points away from the August
lows, but it's quite likely we may test those lows in the very
near term. It all hinges on how Europe and Greece fare over the
next few weeks."
 Doubts about President Barack Obama's $447 billion stimulus
proposal added to the negative sentiment, with investors
unconvinced his administration has the tools to revive the
flagging U.S. economy.
 "The downward momentum had already been established," said
Pat McHugh, senior portfolio manager at Manulife Asset
Management. "And it's a Friday," he said, noting terrorism
threats against New York and Washington ahead of the 10th
anniversary of 9/11 attacks had prompted investors to sell
equities ahead of the weekend.
 All 10 of the TSX's main sectors were lower, with energy
issues leading the decline, plummeting 3.5 percent on a sharp
drop in oil prices. [O/R]
 Canadian Natural Resources (CNQ.TO: Quote) fell 4.4 percent to
C$34.15, while Cenovus Energy (CVE.TO: Quote) dropped 6.4 percent to
C$31.78 and Suncor Energy (SU.TO: Quote) was down 3.2 percent at
 Financial issues sank 2.4 percent. Royal Bank of Canada
(RY.TO: Quote) was the heaviest drag on the index, falling 3 percent
to C$47.47, followed by Toronto-Dominion Bank (TD.TO: Quote), down 2.7
percent at C$74.22.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE closed the session down 296.42 points, or 2.34
percent, at 12,387.54, its weakest close since August 26.
 Base-metal miners were under pressure as copper prices
dropped more than 3 percent to their lowest level in more than
two weeks, while tin and nickel also fell by almost 5 percent
on worries about economic growth. [MET/L]
 Teck Resources TCKb.TO fell 4.6 percent to C$40.58.
 Gold-mining stocks, which have helped cushion market losses
in recent downturns, sank 0.4 percent, even as gold prices
rebounded from early losses on safe-haven buying. [GOL/]
 Adding to the gloom was news that the Canadian economy lost
5,500 jobs in August and the jobless rate rose to 7.3 percent.
The data was far worse than forecast and overshadowed other
signs the economy was making a comeback after a bleak second
quarter. [ID:nN1E7880PE]
 "The Canadian jobs numbers didn't help sentiment," Picardo
added. "It underscores the fact that our economy remains quite
susceptible, quite vulnerable to global concerns."
 ($1=$1 Canadian)
 (Editing by Jeffrey Hodgson)