Toronto stocks take a tumble on economic fears

Fri Feb 29, 2008 5:16pm EST
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By Leah Schnurr

TORONTO (Reuters) - The Toronto Stock Exchange's main index had its biggest decline in more than three weeks on Friday, hit by jitters over the health of the U.S. economy, and with resource and banking shares falling sharply.

The benchmark took its cue from U.S. stock markets, which were pressured by economic worries as a survey showed U.S. consumer sentiment fell to a 16-year low.

The energy and resources sectors, which combined account for more than 40 percent of the Toronto index, shed 2.2 percent and 2.1 percent respectively. Canadian Natural Resources CNQ.TO was down C$1.44, or 1.9 percent, at C$73.76, while Inmet Mining IMN.TO gave up C$4.00, or 4.5 percent, to C$85.24.

A 2.1-percent decline in the financial group also helped pull the index lower, with Bank of Montreal BMO.TO sliding C$2.65, or 5.1 percent, to C$49.70. BMO said it is still in talks to fix two troubled asset-backed commercial paper trusts but that failed to reassure investors who are worried it will face further writedowns.

Royal Bank of Canada RY.TO was off 73 Canadian cents, or 1.5 percent, to C$49.39 after it reported its profit in the first quarter fell 17 percent, hurt by, among other things, writedowns on U.S. securities.

"It's a fairly significant selloff, because, basically the same thing is taking place in New York and we followed that leap," said Fred Ketchen, director of equity trading at ScotiaMcLeod.

The S&P/TSX composite index .GSPTSE closed down 291.20 points, or 2.1 percent, at 13,582.69 with all 10 of its main groups negative. The drop erased all the gains made this week, leaving it down 0.02 percent on the week.

But it was up 3.3 percent for the month, as rising commodity prices helped it come back from January's hefty losses. Before Friday's session, the index had climbed 5 percent over two weeks.   Continued...

<p>A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch</p>