CANADA STOCKS-TSX hits six-week low on Obama plan aftershock

Fri Jan 22, 2010 11:01am EST
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* S&P/TSX composite down 0.74 percent at 11,383.72

* Banks, miners lead index to six-week low (Adds details, quotes)

By Claire Sibonney

TORONTO, Jan 22 (Reuters) - Toronto's main stock index hit its lowest level since Dec. 9 on Friday morning, as jittery markets from London to Tokyo retreated on a White House plan to impose tighter restrictions on banks.

Financial stocks were among the biggest drags on the TSX, with Royal Bank of Canada RY.TO, the country's largest bank, down 1.7 percent at C$53.28, leading the decliners. Toronto-Dominion Bank TD.TO was off 1.14 percent at C$61.56.

U.S. President Barack Obama, looking to advance his agenda after a key Democrat election loss this week, laid out proposals on Thursday to restrict banks' financial risk-taking, which he blamed for helping cause the financial crisis.

"Markets hate uncertainty and this political flip-flopping. Even when analyzed, and the chances of passage are low, in a market that's already sort of nervous, it has a very short-term effect of a few days sometimes," said Paul Hand, managing director at RBC Capital Markets.

"From a short-term standpoint we're starting to get to reasonably oversold conditions, so in the absence of something really concrete happening I would expect investors sometime by next week will try to tune out a lot of this rhetoric," Hand said.

At 10:33 a.m. (1533 GMT) the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 85.38 points or 0.74 percent at 11,383.72 after falling more 1 percent earlier in the session to a six-week low.   Continued...