4 Min Read
* TSX index plunges more than 400 points
* RIM retreats 28 percent after softer forecast
* Energy shares fall along with oil price
* Uncertainty surrounds U.S. bailout proposal (Adds details, quotes)
By Leah Schnurr
TORONTO, Sept 26 (Reuters) - The Toronto Stock Exchange's main index fell more than 3 percent on Friday, battered by a selloff in Research In Motion, tumbling resource shares and uncertainty over the U.S. financial rescue plan.
Tech bellwether RIM RIM.TO set the tone as it skidded 28.2 percent to C$72.57 the day after the BlackBerry-maker said its profit will lag expectations as it spends money on developing a new generation of smartphones. For details see: [ID:nN26288076].
The heavyweight energy sector added to the pressure, sliding along with oil prices, which were hurt by worries over the bailout package. Among the losers, Canadian Natural Resources (CNQ.TO) fell 4.3 percent to C$80.56.
Uncertainty over the fate of the $700 billion U.S. bailout proposal rounded out the negative sentiment, as did the seizure of U.S. savings and loan Washington Mutual (WM.N), the biggest bank failure in U.S. history. See: [ID:nLQ501615].
"I think it's encapsulated by one word more than anything else, and the word is 'uncertainty'," said Peter Chandler, senior vice-president of Canaccord Capital in Waterloo, Ontario.
"Markets have an incredible ability to factor in good news and factor in bad news -- the thing that really unnerves markets is not knowing what the news is."
The S&P/TSX composite index .GSPTSE closed down 420.51 points, or 3.35 percent, at 12,126.00 with all but two of its 10 main sectors in a downturn.
Sun Life Financial Inc (SLF.TO) shed 6.1 percent to C$37.10 after it said it expected to take a third-quarter charge for its holdings in Washington Mutual, but could not yet quantify the impact. See: [ID:nN26276538].
The energy and materials sectors added to the pain, retreating 3.4 percent and 3.7 percent respectively. In the oil patch, Suncor Energy (SU.TO) was down 4.7 percent at C$46.55, while fertilizer firm Agrium (AGU.TO) sagged 15.2 percent to C$65.90.
A clash between Republican and Democratic lawmakers over the U.S. proposal to buy up soured mortgage-backed securities from financial institutions raised worries about if, and when, it will be passed by Congress.
Gavin Graham, director of investments at BMO Asset Management, however noted that there was some optimism south of the border, where the Dow Jones industrial average rose on hopes lawmakers would come to an agreement on the weekend.
"WaMu might actually have concentrated the minds of the lawmakers on Capitol Hill because you see what's happened, and if you don't do this, this is only going to be the first of many," Graham said.
The index lost 6.1 percent in a choppy week that saw it pushed and pulled by wavering sentiment over the bailout. The benchmark is down nearly 12 percent for the month, despite having made a stunning 800-point bounce last week from the cusp of bear market territory.
Market volume on Friday was 404 million shares worth C$6.7 billion. Decliners outpaced advancers 1,134 to 428. The blue chip S&P/TSX 60 index .TSE60 closed down 28.03 points, or 3.71 percent, at 726.75.
In New York, the Dow closed up 121.07 points, or 1.1 percent, at 11,143.13, while the Nasdaq Composite Index .IXIC was hurt by tech shares, including RIM. The Nasdaq finished off 3.23 points, or 0.15 percent, to 2,183.34. ($1=$1.03 Canadian) (Editing by Peter Galloway)