* TSX down 321.81 points, 2.8 pct, at 11,302.03
* All 10 sectors weaker (Updates with details, analyst comment)
By Andrea Hopkins
TORONTO, Oct 3 (Reuters) - Toronto’s main stock market index was down nearly 3 percent in afternoon trade on Monday as growing fears of a Greek default stoked appetite for safe-haven U.S. Treasury bonds and commodity prices extended their slide.
Canadian shares followed global stocks lower as stronger-than-expected U.S. economic data failed to offset negative sentiment, especially in financial stocks, over the increasing likelihood of a Greek default.
All 10 of Toronto’s sectors were weaker, led by energy and financials, as oil prices dropped 1.5 percent and investors fretted about global banking exposure to European debt.
Canadian banks have said they have little or no exposure to Greek debt.
“It’s really just more of the same. It’s the commodity area, that seems to be affected, and still the focus is on Greece and the European sovereign debt situation that is causing all the problems,” said John Kinsey, portfolio manager at Caldwell Securities Ltd.
“It really not Greece per se, but the contagion effect that everybody feels is going to happen and the world is going to go into recession.”
At 2:07 p.m. (1807 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 321.81 points, or 2.8 percent, at 11,302.03.
The heavyweight energy sector, which makes up close to 30 percent of the index, led the sell-off, sliding 4.9 percent. Financials, another third of the index, dropped 2.9 percent, while the gold-dominated materials sector fell 1.9 percent.
Bank shares were battered in Europe as investors feared the impact of a Greek default on holders of the country’s bonds, such as Franco-Belgian financial group Dexia (DEXI.BR), whose stock slumped more than 10 percent.
Greece admitted it would miss its deficit target of 7.6 percent this year, making a Greek debt default look more likely. In a draft budget sent to parliament on Monday, the government forecast a deficit of 8.5 percent of gross domestic product for 2011. [MKTS/GLOB]
Among Toronto’s heaviest decliners, Suncor Energy (SU.TO) slid 5.7 percent to C$25.25, Toronto-Dominion Bank (TD.TO) dropped 3.5 percent to C$71.35, Royal Bank of Canada (RY.TO) fell 3 percent to C$46.62, and Bank of Nova Scotia declined 3.4 percent to C$50.95.
The few gainers were led by Euro Goldfields EGU.TO, which climbed 19.5 percent after it said it has agreed terms for a $600 million, seven-year loan from Qatar Holding. Birchcliff Energy BIR.TO also surged, risng 15 percent after the company said it was looking to sell itself after receiving unsolicited buyout offers.
U.S. data that showed September manufacturing was stronger than expected did little to boost the commodity-heavy TSX, which underperformed Wall Street. [ID:nN1E7920I2] [.N]
Friday marked the end of the worst quarter for Canadian equities since 2008. The TSX extended losses on Monday despite positive flows usually seen on the first day of the new quarter.
“Most of the price action recently has been more on the macro level than Canada-specific or single-name specific, and today is another example. ... The inflows don’t counterweight the amount of pessimism in the market,” said Francis Campeau, broker at MF Global Canada in Montreal.
($1=$1.05 Canadian) (Additional reporting by Claire Sibonney; Editing by Frank McGurty)