CANADA STOCKS-TSX slumps as euro zone fears intensify

Mon Sep 12, 2011 5:52pm EDT
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   * TSX down 238.71 points, or 1.93 pct, at 12,148.83
 * 9 of 10 main sectors weaker, techs gain on RIM
 (Adds details, comments)
 By Trish Nixon
 TORONTO, Sept 12 (Reuters) - Toronto's main stock index
fell sharply on Monday, almost touching a three-week low on
mounting fears that the euro zone's debt crisis could undermine
the global economic recovery.
 The TSX finished more than 200 points lower, 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, a broker at MF Global
Canada in Montreal.
 All three of the index's most heavily weighted sectors
ended lower, with materials leading the fall with a 3.2 percent
retreat. Energy stocks fell 2.1 percent, while financials were
down 1.8 percent.
 The price of gold dropped 2.5 percent, extending losses
from last week, when the metal had its sharpest weekly decline
since late June. The TSX's gold-mining subgroup sank 3.2
 Goldcorp, G.TO was heaviest drag on the index, down 4.3
percent at C$52.55, while Barrick Gold ABX.TO lost 2.8
percent to C$52.87, and Kinross Gold K.TO fell 4.9 percent to
 Other top decliners were Royal Bank of Canada RY.TO, down
2.7 percent at C$46.20, and Suncor Energy SU.TO, off 3.2
percent at 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 as low as 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.
 Xu 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," he said.
 Risk aversion was exacerbated by the failure of the weekend
meeting of finance ministers from the Group of Seven
industrialized countries to come up with any fresh proposals
for boosting global growth. [ID:nN1E78728T]
 Nine of the index's 10 main groups were weaker, but the
technology sector was pushed into positive territory by a
buoyant Research In Motion RIM.TO.
 The BlackBerry maker rose 1.6 percent to C$29.98 after
audio technology firm Dolby Laboratories DLB.N said it had
withdrawn its patent infringement lawsuit against RIM.
 ($1=$0.99 Canadian)
 (Reporting by Trish Nixon; editing by Peter Galloway)