May 7, 2010 / 11:05 AM / 7 years ago

TSX drops broadly on Europe fears

TORONTO (Reuters) - Canadian stocks fell hard on Friday as investors, fearing a growing Greek debt crisis and shaken by Thursday's stock plunge, sold shares across all industry groups and made the Toronto market's main TSX index negative on the year.

With mystery still surrounding the reasons for Thursday's 3.8 percent intraday drop, market players rushed to lighten equity holdings.

"We're still in the aftershocks of yesterday's spectacular plunge," said Rick Hutcheon, president and chief operating officer at RKH Investments.

"Yesterday would shake people's confidence. ... Greece and the whole European mess doesn't seem to be resolved. There's a lot of uncertainty and managers' normal reaction to uncertainty is to sell, take money off the table."

Resource stocks led the way as oil prices extended a week-long slide on concerns that Greece's debt woes would infect other euro zone countries and jeopardize global economic recovery.

The energy sector dropped 1.2 percent, pulled down by Suncor Energy (SU.TO), which dropped 1.4 percent to C$31.92, and EnCana Corp (ECA.TO), which retreated 1.1 percent to C$31.60.

Mining stocks fell 1.9 percent despite a late rally in copper prices and strong gold prices, underscoring investor uneasiness with equities.

Barrick Gold (ABX.TO) eased 3.1 percent to C$44.70, pulling back from a five-month high, while Iamgold (IMG.TO) fell 2 percent to C$18.47 even after it said its quarterly profit rose 12 percent on higher gold prices.

Ventana Gold VEN.TO, however, jumped 7.2 percent to C$10.80 after it said it had settled an ownership dispute at its La Bodega gold deposit in Colombia.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE fell 150.00 points, or 1.27 percent, to 11,692.43.

STOCKS DOWN IN 2010

For the week, the index dropped 4.2 percent, losing ground in each session and falling below its December 31, 2009, level for the first time since March.

Euro zone contagion fears more than offset a report that showed a record number of Canadians found employment in April, data that was expected to put more pressure on the Bank of Canada to raise interest rates in June, ahead of other major industrialized countries.

The Toronto market's sharp intraday drop on Thursday prompted regulators to cancel or re-price about 220 trades that took place at the bottom off the plunge.

Despite losses, one strategist said the market has held up fairly well given recent weakness in resource prices and the European debt worries.

"Investors tend to forget that markets can be very volatile at times, and corrections like these are absolutely necessary to maintain the overall health of the market," said Elvis Picardo of Global Securities in Vancouver.

Shares of Internet casino and gaming software company CryptoLogic Ltd CRY.TO fell 10 percent to C$2.97 after it posted a bigger quarterly loss, hurt by subdued wagering activity.

Stock in DragonWave Inc DWI.TO, a maker of radio transmitters used in cellular networks, plunged 24 percent to C$6.27 a day after the company reported lower-than-expected quarterly results on higher costs.

Reporting by Cameron French; editing by Peter Galloway

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