TORONTO (Reuters) - Toronto’s main stock index skidded to its lowest close in nearly two months on Wednesday as a drop in oil prices shook EnCana Corp and other energy companies and as surprisingly bleak U.S. home sales data raised doubts about economic recovery.
Shares of EnCana ended down 4 percent at C$59.74, Suncor Energy shed 3.2 percent to C$35.82, and Canadian Natural Resources fell 3.6 percent to C$70.50.
The companies were the three biggest drags on the TSX index.
The latest slide in the heavily weighted energy sector came as oil prices fell more than 2 percent on worries about demand in the United States, the world’s largest fuel consumer.
Also in the United States, sales of newly built single-family homes unexpectedly fell 3.6 percent last month, stirring fears that economic recovery may be falling flat.
Shares of gold miners were also among the key drags on the TSX as the price of bullion hit a three-week low in the face of a stronger U.S. dollar, which makes bullion more expensive for non-U.S. dollar holders.
Kinross Gold shares fell 4.6 percent to C$19.36, while Barrick Gold dropped 3.5 percent to C$37.04.
The S&P/TSX composite index fell 248.21 points, or 2.25 percent, to 10,805.33. It was the TSX’s lowest level since September 3, and its fourth straight lower close.
The index, however, is still up 44 percent from the five-year low in hit in March.
“We’re seeing significant profit-taking in some of the stocks that have performed extremely well from the March lows,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.
“One reason for that profit-taking is there seems to be increasing nervousness about what the global economy will do once the economic stimulus starts to get taken out.”
Other stocks on the move included Open Text Corp, which fell 5.8 percent to C$40.03 after the business software maker posted an 88 percent drop in profit.
Shares of Nexen Inc dropped 2.5 percent to C$23.40 after Canada’s fourth-largest independent oil explorer said its third-quarter profit fell 86 percent.
Activity in equity markets could be volatile over the next two sessions as investors adjust their portfolios before month’s end. And while weakness in equities may extend beyond this week, some experts still anticipate more gains in 2009.
“But you might see these declines continue for a while yet and that is simply because we had been pushed up to levels that were unsustainably high in my opinion,” Picardo said.
“Historically we’ve always finished the year on a strong note and I don’t think this year is going to be an exception.”
Editing by Peter Galloway