TSX knocked lower by recovery fears and BMO results

Tue Aug 24, 2010 5:01pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - Toronto's main stock index closed sharply lower on Tuesday as Bank of Montreal's results came in below market expectations and concerns over domestic growth and the global recovery pressured commodity prices.

The TSX's key financial sector led the slide, dropping 2.9 percent, its steepest percentage loss in two months.

Bank of Montreal, the top net loser, said its quarterly profit climbed 20 percent as it set aside much less money for bad loans, but it missed market expectations as trading income dived. BMO shares fell 6 percent to C$55.50.

"BMO had been one of fastest movers and best performers in the last two quarters so it had risen high. People had reasonable expectations," said John Stephenson, senior vice-president at First Asset Investment Management Inc.

"They expected a reasonably in-line quarter so it was a shock."

The market worried that other Canadian banks could report similar results and pushed their shares down.

Canadian Imperial Bank of Commerce fell 2 percent, National Bank of Canada dropped 3 percent, while Royal Bank of Canada slid 3 percent. Bank of Nova Scotia fell 2.8 percent and Toronto-Dominion Bank was lower by 1.7 percent.

The Toronto Stock Exchange's S&P/TSX composite index finished the day down 161.28 points, or 1.4 percent, at 11,557.35, its lowest closing level in a week.   Continued...