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: Quote), the country's largest bank, down 1.7 percent at C$53.28, leading the decliners. Toronto-Dominion Bank (TD.TO: Quote) 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...