CANADA STOCKS-TSX falls hard on downgrades, oil price drop

Mon Dec 22, 2008 4:57pm EST
 
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*TSX index drops 3.54 percent

*Downgrades of energy, fertilizer companies weigh

*Oil drops almost 6 percent to below $40 a barrel (Adds details, comments)

By Wojtek Dabrowski

TORONTO, Dec 22 (Reuters) - Toronto's main stock index shed more than 3.5 percent on Monday as analyst downgrades of energy and fertilizer companies combined with a steep drop in crude prices to drag the resource-heavy market into a broad selloff.

Nine of the 10 main subgroups of the benchmark gave up ground, including the heavily weighted energy and materials groups, which lost 5.95 percent and 5.07 percent, respectively. Financials fell 2.05 percent.

The losses came as U.S. oil dropped nearly 6 percent to below $40 a barrel on signs that the global economic gloom was further slowing fuel demand.

"The panic that we saw in October and November seems to have dissipated to quite an extent," Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

"The focus now is on the hit that companies across the board are taking from this economic slowdown and certainly the commodities and energy are at the forefront of that downside."   Continued...