UPDATE 2-Toronto stocks sink 2 pct as financials drag

Thu Jul 24, 2008 4:37pm EDT
 
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(Updates closing numbers, adds details, quotes)

*TSX slumps more than 2 percent in broad selloff

*Banks weigh following recent strong rally

*Aurelian Resources rises after bid from Kinross Gold

TORONTO, July 24 (Reuters) - The Toronto Stock Exchange's main index sank more than 2 percent on Thursday in a broad decline sparked by losses in financial-services shares as sour data highlighted concerns over the U.S. economic outlook.

Agnico-Eagle Mines AEM.TO was among the biggest decliners by weight, losing 7.8 percent, after it reported a weaker than expected quarterly profit, a lower production outlook for the year, and warned of a jump in project costs over the next two years.

All of the major banks were down, including Canadian Imperial Bank of Commerce, which lost 5.9 percent. The financial-services sector dropped back from this past week's strong rally, taking its cue from U.S. bank stocks, which fell after data showed a drop in sales in existing U.S. homes.

Before Thursday's losses, the sector - which had been beaten down by the fallout from the credit crunch and U.S. housing slump - jumped more than 16 percent over six sessions, helped by better than expected bank results south of the border.

"There seems to be a little bit of scepticism today as to whether this financial run was just a spike out of a short-covering maneuver or whether it was a good, solid, sustained move upward," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd, in Calgary.   Continued...