5 Min Read
* TSX down 223.48 pts, or 1.9 pct, at 11,571.71
* Materials, energy sectors lead index losses
* Poor German debt auction steepens fears
* Chinese, U.S. economic data weigh
* Index has lowest close since Oct. 6 (Adds details, analysts' comments)
By Jon Cook
TORONTO, Nov 23 (Reuters) - Canadian stocks plunged on Wednesday as commodity-related issues sank on soft economic data from the United States, China and Europe and as euro zone debt fears intensified after a poor sale of German bonds.
The negative tone was set early after Germany suffered one of its least successful debt auctions since the euro currency was introduced in 1999. [MKTS/GLOB]
"They were not able to issue the full target amount at certainly reasonable yields," said Julie Brough, vice president at Morgan Meighen & Associates.
"You are seeing investors shy away from Europe as a whole, not just the sick parts of Europe. This is going to be a problem," Brough said.
Commodities took it on the chin, with prices for oil, gold, and copper and other base metals falling sharply, sending energy and materials shares spiraling downward. [ID:nL4E7MN1O1]
Energy stocks led the slide, slipping 3 percent as oil prices fell more than 2 percent [O/R]. Suncor Energy (SU.TO) tumbled 4.6 percent to C$29.01, leading the oil and gas retreat.
Heavily weighted materials issues were pulled lower by gold mining stocks, which dropped 2 percent as the euro zone debt crisis hurt bullion prices and pushed up the safe-haven appeal of the U.S. dollar. [GOL/]
Miner Goldcorp Inc (G.TO) was the biggest decliner, dropping 3.2 percent to C$50.71.
Adding to the malaise was a slowdown in Chinese and European manufacturing, coupled with higher U.S. jobless numbers and flat consumer spending, all of which reinforced fears of a global economic slowdown. [ID:nL5E7MN1M4] [ID:nN1E7AM0EH]
"It goes on like Chinese water torture... drip, drip, drip," said John Kinsey, portfolio manager at Caldwell Securities Ltd.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended down 223.48 points, or 1.9 percent, at 11,571.71, its lowest close since Oct. 6.
A fall in copper and base-metals prices, spurred by the contraction in Chinese factory activity, pushed base-metals miners down more than 4 percent. [ID:nL4E7MN20U]
Teck Resources Ltd TCKb.TO was among the hardest hit mining stocks, falling 4 percent to C$33.02.
The index's financial sector was also sideswiped by the German bond auction as the market worried the euro zone's strongest economy was beginning to feel the effects of the spiraling debt crisis. [ID:nL5E7MN3J8]
Royal Bank of Canada (RY.TO) and Bank of Nova Scotia (BNS.TO) shares both fell 2.3 percent to C$43.90 and C$48.86 respectively.
"We've had a slew of these news items on the macro front that are weighing quite heavily, and even any one of these in isolation on a given day like today would set a negative tone for the market," said Garey Aitken, chief investment officer at Bissett Canadian Equity Fund.
Aitken, who manages more than $7 billion in funds, said the European crisis is the main reason economically sensitive materials, energy and industrial stocks are diving.
"There's just more and more fatigue and frustration on the part of market participants when they look at this sovereign debt problem in Europe," Aitken said. "There's a lot of talk and not enough action."
Nine of the TSX index's 10 main sectors were down. Telecommunications was the only one to escape, rising a scant 0.1 percent.
Manitoba Telecom Services Inc MBT.TO led the sector's gains, rising 1.9 percent to C$30.31.
With U.S. markets closed on Thursday for the Thanksgiving holiday and little action expected for the rest of the week in North America, Kinsey said hedge funds and other institutional investors didn't want "to be long over that period", contributing to the broader market selloff.
"A lot of positions were closed out and this created some of the pressure that's there along with the European sovereign debt," Kinsey said.
($1=$1.05 Canadian) (Additional reporting by Jennifer Kwan; Editing by Peter Galloway)