January 21, 2008 / 7:59 PM / 10 years ago

UPDATE 4-Toronto stocks in biggest intraday drop since 2001

(Updates figures, adds details, comments)

TORONTO, Jan 21 (Reuters) - The Toronto Stock Exchange’s main index fell for a fifth straight session on Monday, diving more than 4 percent in its biggest intraday drop in seven years, amid concern about the health of the U.S. economy.

The S&P/TSX composite index .GSPTSE was down 520.10 points, or 4.08 percent, at 12,217.02 in afternoon trading, after earlier falling as much as 617 points. All of the TSX’s 10 main groups were lower.

It was the biggest intraday decline since Feb. 16, 2001, and the latest in a string of hefty losses that began last week amid writedowns in the North American banking sector and worries about the prospect of a U.S. recession.

Since last Tuesday, the index has lost more than 1,400 points, erasing all of 2007’s gains. On Monday, the index revisited territory last seen in November 2006.

The Toronto benchmark index took its cue from world equitymarkets, which slumped on Monday on jitters that a U.S. slowdown could hurt the world’s economies.

“There’s a great deal of uncertainty around,” said John Ing, president of Maison Placements Canada.

“Everyday there seems to be a new credit problem, there seems to be a disappointing corporate loss, so it’s adding up that this bear market is just getting its teeth in the arm of the market.”

On Monday, resource issues suffered the biggest losses, with the energy and materials sectors giving up 5.1 percent and 4.9 percent respectively.

The energy sector followed oil’s cue, with U.S. light crude oil down $1.91, or more than 2 percent, at $88.66 a barrel, hurt by concern over a U.S. slowdown. Suncor Energy (SU.TO) slid C$4.39, or 4.7 percent, to C$88.45, while Canadian Natural Resources (CNQ.TO) fell C$2.71, or 4.1 percent, to C$63.10.

In the materials group, Potash Corp of Saskatchewan (POT.TO) was down C$4.43, or 3.5 percent, at C$121.07. The subindex of gold producers lost 2.8 percent, while the price of gold fell to a two-week low.

The sectors have been rattled by worries that an economic slowdown could staunch demand for resources.

Another heavyweight, the financials group, tumbled 3.2 percent, with Bank of Montreal (BMO.TO) down C$2.24, or 4.2 percent, at C$51.77, and Canadian Imperial Bank of Commerce (CM.TO) falling C$1.64, or 2.5 percent, to C$65.40.

With the drop, the TSX financial services index had wiped out all of its gains over the last 1-1/2 years.

“Our view has been for some time that the trend here is down, it’s just a function of how much longer the problems in the credit market are going to continue to surprise people,” said Michael Sprung, president at Sprung & Co. Investment Counsel.

Among individual companies, Quebecor World Inc IQW.TO slumped 16 Canadian cents, or 46.3 percent, to 18 Canadian cents, after saying it would file for creditor protection after conditions for a C$400 million ($388 million) rescue financing were not met.

Markets in the United States, Canada’s biggest trading partner, were closed for Martin Luther King Day. A recession in the U.S. could hurt corporate profits, spending and economic growth in Canada. ($1=$1.03 Canadian) (Additional reporting by Scott Anderson and Jonathan Spicer) (Reporting by Leah Schnurr; Editing by Bernadette Baum)

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