CANADA STOCKS-TSX rattled by Fed, hits one-month low

Wed Sep 21, 2011 5:47pm EDT
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   * TSX ends down 254.87 points, or 2.09 pct, at 11,955.01
 * Touches lowest level since Aug. 10
 * All 10 main sectors lower; energy, materials weigh
 (Adds details, analyst comment)
 By Trish Nixon
 TORONTO, Sept 21  (Reuters) - Toronto's main stock index
plunged more than 250 points on Wednesday, touching its lowest
level in more than a month, after the Federal Reserve promised
new stimulus action to boost the struggling U.S. economy but
also painted a grim picture of the outlook for growth.
The Fed, as expected, said it would buy more long-term
Treasury bonds in an effort to lower longer-term rates and
borrowing costs. But investors worried the central bank's
latest plan would have little impact in an economy that appears
to be stagnating. [.N]
"The stimulus that they talked about is a lot less than what
people were hoping for," said Michael Sprung, president of
Sprung & Co Investment Counsel.
"The fear is that things are going to continue at a very
very slow pace."
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE closed down 254.87 points, or 2.09 percent, at
11,955.01. It fell as low as 11,948.40, its weakest level since
Aug. 10.
 The selloff was broad-based, with all 10 of the TSX's main
groups finishing lower. Base-metal miners and energy companies
were among the hardest hit, falling along with copper and oil
prices.  [O/R] [MET/L]
 Suncor Energy (SU.TO: Quote) was down 2.6 percent at C$28.13,
while Potash Corp (POT.TO: Quote) lost 2.6 percent to C$50.37, and
Teck Resources TCKb.TO dropped 5.8 percent to C$34.03.
 "It's a resetting of valuation and prospects to the
downside for both these categories, based on an outlook for
economic growth that has to come down. These are pieces of the
puzzle that tend to absorb that negativity the most," said Greg
Eckel, senior vice-president at Morgan Meighen & Associates.
 The economic uncertainty drove the industrials group down
4.1 percent. Canadian National Railway (CNR.TO: Quote) was the top
heavyweight decliner, dropping 4.3 percent to C$65.65.
 Financials lost 1.7 percent, led by Toronto-Dominion Bank
(TD.TO: Quote), down 1.7 percent at C$72.20, and Bank of Nova Scotia
(BNS.TO: Quote), off 1.9 percent at C$50.66.
 Even traditionally safe-haven gold fell 1 percent as the
U.S. dollar climbed against major currencies, weighing on
gold-mining shares. Goldcorp (G.TO: Quote) fell 2.1 percent to
C$51.51. [GOL/]
 In its policy statement issued after the close of its
two-day meeting, the Fed cited "significant downside risks to
the economic outlook."
 It said U.S. economic growth remains slow, and that recent
indicators point to continuing weakness in overall labor market
conditions, while the unemployment rate remains elevated.
"The realization is building in that there's no quick fix to
this problem," said Eckel. "Things may be getting worse rather
than better."
 ($1=$1.01 Canadian)
 (Editing by Peter Galloway and Rob Wilson)