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: Quote) 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>