Stocks falter as credit woes weigh

Tue Aug 12, 2008 5:28pm EDT
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By Leah Schnurr

TORONTO (Reuters) - The Toronto Stock Exchange's main index closed lower on Tuesday as financial shares fell on worries over more losses related to the credit crunch, offsetting a rebound by gold producers.

Bay Street's financials were caught up in more woes out of the United States after JPMorgan Chase (JPM.N: Quote) said it has accumulated $1.5 billion of losses so far this quarter on mortgage-related assets.

The news stoked concerns of more pain yet to come out of the U.S. financial crisis, and in Toronto National Bank of Canada NA.TO slid 2.8 percent.

"What it boils down to in the big picture is we've had a liquidity boom for 20-odd years," said Levente Mady, broker at MF Global Canada in Vancouver.

"Now the ship is turning around and we're getting a liquidity contraction and that's not good for financials -- period."

The S&P/TSX composite index .GSPTSE closed down 36.19 points, or 0.27 percent, at 13,167.00 with six of its 10 main sectors in negative territory. It was the fourth session in a row the benchmark index has closed lower.

The financial sector lost 1.1 percent, with National Bank down C$1.46 at C$50.44, and Royal Bank of Canada (RY.TO: Quote) falling 79 Canadian cents, or 1.7 percent, to C$47.13.

"The financials have just stopped lending," said Adrian Mastracci, portfolio manager and president at KCM Wealth Management Inc. in Vancouver.   Continued...

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