TSX sheds 1.4 percent, troubled by gloomy outlook

Tue Oct 23, 2012 5:17pm EDT
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By Solarina Ho and John Tilak

TORONTO (Reuters) - Canada's main stock index tumbled as much as 2 percent on Tuesday as bearish U.S. corporate forecasts and a credit downgrade of five Spanish regions sent resource and financial stocks sharply lower and revived distress over the global economy.

Energy stocks, which had been hit hard on Monday, fell 1.97 percent. Suncor Energy, one of the most heavily weighted decliners, dropped 2.16 percent to C$32.66. Canadian Natural Resources fell 3.7 percent to C$29.64.

Financial stocks, led by the Royal Bank of Canada, fell 1.3 percent, in sympathy with U.S. bank stocks.

"The market is very skittish ... fear of what's going on worldwide," said Irwin Michael, portfolio manager at ABC Funds.

"We all know the economy appears to be scratching bottom, and slowly but surely moving up, but people are concerned about earnings per share."

Soft earnings outlooks from major U.S. companies like DuPont, 3M fueled worries over the economic health the United States, Canada's largest trading partner.

Sixty-three percent of the S&P 500 companies that have reported quarterly results so far have missed analysts' expectations for revenue. By contrast, since 1994 an average of 62 percent of companies have exceeded estimates. Over the past four quarters, 55 percent of companies have beaten.

"It's a pretty ugly day. Just about everything that could go wrong is going wrong," said John Kinsey, portfolio manager at Caldwell Securities Ltd.   Continued...

A general view of the TSX (Toronto Stock Exchange) Broadcast Centre in Toronto June 20, 2008. REUTERS/Mark Blinch