Toronto slumps as commodity fears grip market

Mon Oct 27, 2008 5:45pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - The Toronto Stock Exchange's main index tumbled on Monday to close below 9,000 for the first time since December 2004 as worries intensified that the faltering global economy will further erode markets for Canadian-produced commodities such as oil and metals.

In its second biggest percent drop in history, according to operator TMX Group, the S&P/TSX composite index lost more than 300 points in the last half hour of trade, and closed down 756.75 points, or 8.14 percent, at 8,537.34, with all of its 10 main groups lower.

The benchmark index is down 27 percent so far this month.

Heavily weighted decliners on Monday included Manulife Financial, which fell 15.3 percent, and EnCana Corp, which fell 8.5 percent.

Toronto's retreat was far steeper than that seen on U.S. markets due to its heavy weighting in commodity-related issues, said Andrew Pyle, investment adviser at ScotiaMcLeod in Peterborough, Ontario.

"The continued pressure on the commodity prices remains a theme and that's really coming from this realization that the global contagion of weaker economic growth in North America is becoming more pervasive. In other words, it's hitting more countries," Pyle said

"At the end of the day, you stack up the TSX to the S&P and we still have much greater weighting and sensitivity to commodity prices."

The energy sector fell 9.2 percent as oil prices settled at an 18-month low at $63.22 a barrel on worries over weakening demand. [ID:nSYD351781] Canadian Natural Resources Ltd was down 10.5 percent at C$46.55, while EnCana fell 8.5 percent to C$51.04   Continued...

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