CANADA STOCKS-TSX hit by auto industry woes, oil's drop

Mon Mar 30, 2009 10:20am EDT
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 * TSX down 2.9 percent at 8,565.57
 * Energy sector down 4.4 percent as oil stumbles
 (Adds details, quotes)
 By Jennifer Kwan
 TORONTO, March 30 (Reuters) - Toronto's main stock index
fell hard on Monday morning as oil and base metals prices
dropped and fresh troubles in the auto sector hit investor
 The resource-heavy Toronto market followed world stocks
lower on fears that General Motors Corp (GM.N: Quote) and Chrysler
were edging closer to bankruptcy. [ID:nSP424474] after the U.S.
government took a hard line in its dealings with them.
 Concerns about the banking sector in Europe also hit
investor sentiment after three European governments were forced
to help struggling lenders. [ID:nLU302379]
 The biggest contributors to the index's drop included Royal
Bank of Canada (RY.TO: Quote), down 3.8 percent at C$35.58, and
Manulife Financial (MFC.TO: Quote), which dropped 7 percent to
C$13.96. The broader financials group fell 4.6 percent.
 "The fact that (U.S. auto companies) have been unable to
come up with a satisfactory restructuring plan points to what
is being perceived as more systemic problems within the
industry," said Michael Sprung, president at Sprung & Co.
Investment Counsel.
 Sprung said worries over the possible bankruptcy of the
automakers spilled over into broader fears over the potential
impact on the U.S. economy.
 As well, the market is also seeing the big auto bailouts as
"turning into somewhat of a black hole for taxpayers' money,"
he added.
 At 9:51 a.m. (1351 GMT), the S&P/TSX composite index
.GSPTSE was down 255.49 points, or 2.9 percent, at 8,565.57,
with all of the 10 main groups in the red.
 The index ended lower on Friday, rattled by a drop in
commodity prices, but for last week the index was still up 3.7
percent, its third straight week of gains.
 The big energy sector dropped 4.4 percent as the price of
crude fell below $50 a barrel, pressured by a stronger U.S.
dollar and a slump in global stock markets. [ID:nSYD421224]
Suncor Energy (SU.TO: Quote) dropped 4.4 percent to C$28.06, and
Canadian Natural Resources (CNQ.TO: Quote) fell 4.5 percent to
 The consumer discretionary sector fell 3.3 percent, while
consumer staples fell 1.3 percent.
 Rising gold prices helped support gold miner Yamana Gold
(YRI.TO: Quote), up 2.6 percent at C$11.59, and Agnico Eagle (AEM.TO: Quote),
which rose 1.8 percent to C$71.06. The broader materials group,
home to mining and fertilizer companies, was down 0.2 percent.
 ($1=$1.25 Canadian)
 (Reporting by Jennifer Kwan; editing by Peter Galloway)