Toronto stocks take a big hit as commodities fall

Wed Oct 15, 2008 5:32pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - The Toronto Stock Exchange's main index plunged again on Wednesday as resource stocks were pressured by falling commodity prices on concerns global economic weakness would cut demand.

The tumble chipped away at big gains made on Tuesday when the benchmark index logged a record 9.82 percent rise on hopes that moves by policy-makers around the globe would help fix the financial crisis.

The heavily-weighted energy sector led the way down, dropping 11.8 percent as U.S. crude plummeted $4.09 a barrel to settle at $74.54 a barrel on recession fears.

Base metals prices also weighed on the benchmark index, helping to push the materials sector down by 9.7 percent.

"The market is saying to us it's going to take longer for general business to get going than maybe people were thinking," said Brian Pow, vice president, research and equity analyst at Acumen Capital Partners, in Calgary, Alberta. "As a result, maybe earnings are not going to be as good as one would expect."

Sentiment will be tough to change unless there's some evidence of an improved housing market, said Andrew Martyn, portfolio manager at Davis-Rea.

"What you really need in the United States if you want clear sailing from a consumer point of view and a healthy psychological point of view, which carries on to stocks and car buying and house buying ... you need real estate to base, flatten out and go back up," he said.

The S&P/TSX composite index closed down 631.83 points, or 6.35 percent, at 9,323.83, with all but one of its 10 main groups lower. The consumer staples group rose 1.4 percent.   Continued...

<p>A Bay Street sign is seen at the financial district in Toronto, October 10, 2008. REUTERS/Mark Blinch</p>