TSX tumbles as banks get hit hard

Thu Jul 24, 2008 5:36pm EDT
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By Leah Schnurr

TORONTO (Reuters) - The Toronto Stock Exchange's main index sank more than 2 percent on Thursday in a broad decline sparked by losses in financial-services shares as sour data highlighted concerns over the U.S. economic outlook.

Agnico-Eagle Mines (AEM.TO: Quote) was among the biggest decliners by weight, losing 7.8 percent, after it reported a weaker than expected quarterly profit, a lower production outlook for the year, and warned of a jump in project costs over the next two years.

All of the major banks were down, including Canadian Imperial Bank of Commerce, which lost 5.9 percent.

The financial-services sector dropped back from this past week's strong rally, taking its cue from U.S. bank stocks, which fell after data showed a drop in sales in existing U.S. homes.

Before Thursday's losses, the sector - which had been beaten down by the fallout from the credit crunch and U.S. housing slump - jumped more than 16 percent over six sessions, helped by better than expected bank results south of the border.

"There seems to be a little bit of skepticism today as to whether this financial run was just a spike out of a short-covering maneuver or whether it was a good, solid, sustained move upward," said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd in Calgary.

Kerkovius added that he felt the movement was a sustained one as short-covering wouldn't have moved the sector up so much.

The S&P/TSX composite index .GSPTSE closed down 306.52 points, or 2.27 percent, at 13,206.14, its third negative session in a row. All of its 10 main sectors ended the day lower.   Continued...

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