Banks drag on TSX, telecoms lone bright spot

Tue Oct 27, 2009 5:19pm EDT
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By Ka Yan Ng

TORONTO (Reuters) - Toronto's main stock index fell sharply on Tuesday, weighed down by shares of banks and insurers, which dropped for a third straight session, and by miner Kinross Gold (K.TO: Quote), which cut its production forecast.

Banking and insurance shares were the heaviest drag on the index, with all five big banks among the top decliners.

The fall was led by Royal Bank of Canada (RY.TO: Quote), which declined 3.5 percent to C$53.70, followed by Toronto-Dominion Bank (TD.TO: Quote), down 3.6 percent at C$62.17.

Kinross shares ended down 6.24 percent at C$20.30 after the company lowered its full-year 2009 production outlook and raised its estimate for average cost of sales.

Other gold miners joined the selloff, partly because of a bounce higher for the U.S. dollar, which tends to draw attention away from alternative investments such as gold. Goldcorp (G.TO: Quote) shares were off 2 percent at C$40.12, and Eldorado Gold (ELD.TO: Quote) fell 2.9 percent to C$11.84.

The energy group was unable to hold on to gains even as the price of oil edged above $79 a barrel. Suncor (SU.TO: Quote) fell 1.6 percent to C$37.01.

"Energy, materials, financials ... are still good areas, it's just they went up a bit too quickly," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier. "We'll eventually come back but we need a bit of a respite."

The S&P/TSX composite index .GSPTSE finished down 181.34 points, or 1.61 percent, at 11,053.54.   Continued...

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