Toronto stocks plunge in wake of Lehman collapse

Mon Sep 15, 2008 4:56pm EDT
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By Wojtek Dabrowski

TORONTO (Reuters) - The main index of the Toronto Stock Exchange's plunged 4 percent on Monday in a broad selloff triggered by the failure of Wall Street investment bank Lehman Brothers and a big drop in the price of oil.

The bankruptcy protection filing by Lehman, as well as the sale of Merrill Lynch and the fight for survival unfolding at U.S. insurance giant American International Group, sent investors fleeing from every sector of the Toronto market.

"The TSX is being hit in a big way by what's happening in the U.S. financial industry," said Elvis Picardo, an independent strategist based in Vancouver. "There's a contagion effect at play here."

U.S. crude oil settled below $96 per barrel in reaction to the turmoil, but also because of early signs that Hurricane Ike had spared key U.S. energy infrastructure.

The S&P/TSX composite index fell 515.55 points, or 4.04 percent, to close at 12,254.03.

"Going into this month, we were one of the few indexes worldwide to be still holding up to some extent," Picardo said. "But the global selloff has caught up in a big way."

Every group of the benchmark composite gave up ground on Monday, including energy, which shed 6.05 percent, and materials, which fell 6.13 percent. Financials lost 1.91 percent.

The list of the day's biggest net losers read like a "who's who" of Corporate Canada, featuring a diverse array of premier names dragged lower by the fire sale that took place on the TSX.   Continued...

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