April 27, 2010 / 8:49 PM / in 7 years

CANADA STOCKS-TSX dives on Greece, Portugal downgrades

* TSX down 1.09 percent at 12,146.74

* Heavily weighted banks and energy groups fall

* S&P cuts Greek debt to junk, downgrades Portugal (Adds details, updates closing numbers)

By Cameron French

TORONTO, April 27 (Reuters) - Toronto’s main stock index fell on Tuesday from 19-month highs the day before as investors bailed out of stocks across all industry groups after credit ratings for Greece and Portugal were slashed.

Heavily weighted financial shares slid 1.46 percent, while energy issues dropped 1.83 percent as the downgrades sparked a flight-to-safety U.S. dollar rally that pressured commodity prices.

Bank stocks were led downward by Canadian Imperial Bank of Commerce (CM.TO), which fell 2 percent to C$75.43, while energy issues were pulled down by Nexen Inc NXY.TO, which fell 4.1 percent to C$25.42.

Ratings agency Standard & Poor’s downgraded Greek ratings to junk status on concerns about its ability to implement the reforms needed to address its high debt burden. [ID:nLDE63P0LU]

It also cut the rating on Portugal by two notches to A-minus, four levels above speculative, because of concerns about the country’s ability to deal with high debt levels.

“It has sent a clear reminder to the markets about the extent of the problems in the euro region,” said Elvis Picardo, a strategist at Global Securities in Vancouver.

“The major fear at this point is if Greece or Portugal or anyone else defaults on their debt. That will really cause a firestorm in the market.”

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended the session down 134.23 points, or 1.09 percent, at 12,146.74. Coming into the session, the index had climbed for six straight days.

The one area of strength was in gold-mining stocks, as worried investors sought a safe haven in the metal.

Iamgold (IMG.TO) charged ahead 3.6 percent to C$16.85, while Kinross Gold (K.TO) gained 2.9 percent to C$18.72.

However, with base metals stocks hurt by the drop in industrial metals prices, the TSX index’s materials sector ended the session down slightly.

Teck Resources TCKb.TO, which mines copper, zinc, and coal, retreated 5 percent to C$41.05.

$1=$1.01 Canadian Reporting by Cameron French, additional reporting by Ka Yan Ng; editing by Peter Galloway

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