4 Min Read
(Updates to midday)
* TSX index falls more than 1 percent
* Research In Motion down sharply after quarter results
* Financials weigh amid worries of U.S. writedowns
* Energy sector retreats despite oil gains
By Leah Schnurr
TORONTO, June 26 (Reuters) - The Toronto Stock Exchange's main index slid more than 1 percent on Thursday, in a broad-based decline led by the financial sector and a big drop by Research In Motion RIM.TO.
All of the major banks were lower, caught up in concerns over the outlook for U.S. financials after Goldman Sachs said there could be deep second-quarter losses and writedowns at Citigroup (C.N) and Merrill Lynch & Co MER.N.
Shares of BlackBerry-maker RIM set the tone, hammered after the profit outlook it released on Wednesday fell shy of what analysts had expected. The influential stock was down C$17.35, or 12.1 percent, at C$126.65.
"What's happened historically with RIM is it's tended to move higher in advance of the earnings announcement, in expectation that they'll surprise and beat the Street, which is what they've pretty consistently done," said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.
The S&P/TSX composite index .GSPTSE was down 233.55 points, or 1.62 percent, at 14,207.58 with nine of its 10 main sectors on the downside.
Waterloo, Ontario-based RIM posted first-quarter earnings that more than doubled from a year earlier, but also came just short of the Street's expectations. RIM said it expects second-quarter earnings of 84 to 89 cents a share, a penny lower than the 90 cents analysts were forecasting.
Adding to the downward momentum, the heavyweight energy sector retreated despite a gain in oil prices. Analysts said some of the selloff could be chalked up to profit-taking.
Canadian Natural Resources (CNQ.TO) was off C$1.07, or 1.1 percent, at C$96.75, while Interoil Corp IOL.TO lost C$1.93, or 5.9 percent, to C$30.91. Overall, the sector was down 1.3 percent.
In financials, Canadian Imperial Bank of Commerce (CM.TO) fell C$1.89, or 3.1 percent, to C$59.22, and National Bank of Canada (NA.TO) slipped C$1.62, or 3.1 percent, to C$50.24, with the group down 2.3 percent.
Chandler said that economic worries weighed after the U.S. Federal Reserve's decision to stand pat on interest rates highlighted concerns that inflationary pressures would prompt the central bank to raise interest rates. The Fed had been aggressively cutting rates in an attempt to boost a flagging U.S. economy.
The materials sector was the lone group to push higher, gaining 1.3 percent with help from gold producers, as the price of bullion surged as the greenback weakened.