CANADA STOCKS-TSX hits 3-week low as euro zone fears intensify

Mon Sep 12, 2011 5:09pm EDT
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 *TSX down 238.71 points, or 1.93 percent, at 12,148.83
 *9 of 10 index sectors weaker, techs gain on RIM
 (Updates with details, comments)
 By Trish Nixon
 TORONTO, Sept 12 (Reuters) - Toronto's main stock market
index fell sharply on Monday, almost touching a three-week low
on mounting fears that the euro zone's debt crisis could
undermine global economic recovery.
 The S&P/TSX composite tumbled even as U.S. stock markets
staged a late-day rally as investors cashed out of safe-haven
bullion to cover losses elsewhere, hitting Toronto's
gold-mining shares. Oil and copper prices also fell, pressuring
the resource-heavy index.  [GOL/] [MET/L] [O/R]
 "The gold sector used to play a counterweight to the
financial firms, and today (both sectors) are going south ...
so for the first time in roughly a month we've underperformed
in a down market," said Francis Campeau, broker at MF Global
Canada in Montreal.
 All three of the index's most heavily weighted sectors
dived, with materials, down 3.2 percent, leading the fall.
Energy stocks fell 2.1 percent, while financials were down 1.8
 Among the most heavily weighted decliners, Goldcorp G.TO
lost 4.3 percent to C$52.55, Royal Bank of Canada RY.TO
dropped 2.7 percent to C$46.20, and Suncor Energy SU.TO fell
3.2 percent to C$28.51.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE closed down 238.71 points, or 1.93 percent, at
12,148.83. Earlier in the session it fell to 12,041.61, its
weakest level since Aug. 26.
 Concerns that Moody's Investors Service might downgrade the
credit-worthiness of French banks, which are widely exposed to
Greek bonds, and the lack of a solution to Greece's months-old
debt crisis rattled investor confidence. [MKTS/GLOB]
 "You might be looking at not only a potential sovereign
credit crisis, there could be another banking crisis in
Europe," said Marcus Xu, director of equity investments at
Genus Capital Management in Vancouver. He noted that credit
default swaps were indicating a 98 percent chance of a Greek
debt default in the near term.
"Canada, being very commodity driven, very economically
sensitive, could be impacted quite a bit," Xu said.
 Risk aversion was exacerbated by the failure of the weekend
meeting of finance ministers from the Group of Seven
industrialized nations to come up with any fresh proposals for
boosting global growth. [nN1E78728T]
"There's just not a lot of good news around right now ...
The volatility is going to be here and you just have to hold
your breath and see what comes up next," Xu said.
 Nine of the index's 10 main groups were lower, but the
technology sector was pushed into positive territory by
Research In Motion RIM.TO, which rose 1.6 percent to
 Dolby Laboratories DLB.N said on Monday it has withdrawn
its patent infringement lawsuit against RIM after the
BlackBerry maker inked a licensing deal to use some of Dolby's
technologies. [S1E78B0R0]
 ($1=$0.99 Canadian)
 (Reporting by Trish Nixon; editing by Peter Galloway)