4 Min Read
*TSX falls 231.79 points, or 2 percent, to 11,375.21
*All 10 of TSX index's down
*China data revision, bank funding hits TSX (Adds details)
By Jennifer Kwan
TORONTO, June 29 (Reuters) - Toronto's main stock index fell sharply on Tuesday morning as commodity prices fell on renewed fears about slowing growth in China and as worries about Europe's debt problems undermined risk appetite.
Weakness in its energy, financials and materials sectors -- the three pillars of the Toronto TSX index -- pushed the index to its lowest level since May 25.
Teck Resources TCKb.TO dropped 5.8 percent to C$31.72 and Potash Corp of Saskatchewan (POT.TO) fell 2.2 percent to C$92.97, pushing the materials sector down by 2 percent.
The index's move lower was largely fueled by a revision to the Conference Board's leading economic index for China to a 0.3 percent gain in April rather than the 1.7 percent rise the group had reported earlier. [ID:nN29126233]
"There's a lot of concern around policy measures being taken in China to slowdown the economy there. It looks like the slowdown might be a bit sharper than what a lot of people thought," said Jean-Francois Dion, vice president and portfolio advisor, Canadian equities, at RBC Dominion Securities.
Dion and other market observers saw the correction as the main market-moving headline, despite being a second-tier data point.
"Given how important China is in the current environment and how much concern there's been to the growth in China, I think that's absolutely what's moving the market today," Dion said. "The sectors levered to China are the ones being hit hardest today."
At 11:07 a.m. (1507 GMT), the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 231.79 points, or 2 percent, at 11,375.21, with all of its 10 main groups lower. The index earlier touched a low of 11,334.91.
Joe Ismail, technical analyst at Maison Placements Canada, said battered investor confidence could drive the TSX index even lower.
"The support zone for the TSX has been violated today at 11,500. That's been taken out, that's where the 200-day moving average was," he said, noting the index could drop to 10,250 area.
It was a similar story in the United States, where the three main stock indexes were already in a weak technical position after their daily MACD, a widely followed momentum indicator, generated a "sell" signal.
Losses on the TSX index mounted on Tuesday morning after U.S. data showed consumer confidence fell steeply in June on worries about the labor market, adding to broader growth concerns. [.N] [ID:nN29139725]
The market was already jittery about scheduled bank repayments worth 442 billion euros to the European Central Bank on Thursday that could leave a liquidity shortfall in the financial system of more than 100 billion euros. [MKTS/GLOB]
Financials lost 2 percent, with Royal Bank of Canada (RY.TO), the country's biggest lender, down 2.4 percent at C$51.35.
$1=$1.05 Canadian Additional reporting by Claire Sibonney; editing by Peter Galloway