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.
The blue chip S&P/TSX 60 index closed 10.44 points lower, or 1.53 percent, at 672.60.
Even without the disappointing results from BMO, the market would have fallen along with global markets on worries about the economic recovery, analysts said.
Six of the TSX’s 10 main sectors were lower, with resource issues weighing heavily as the price of oil and base metals fell on recovery fears.
Suncor Energy dropped 1.4 percent and Teck Resources sank 3 percent.
U.S. and Canadian economic data on Tuesday did little to lift investor spirits. Sales of previously owned U.S. homes took a record drop in July to 15-year lows, suggesting further loss of momentum in the economic recovery.
“All the economic data is saying one thing: slow recovery, possibly double dip, although unlikely,” said Stephenson. “And if growth is slow, why own stocks. Why do you want a slice of pie of future earnings if they aren’t going to grow?”
In Canada, data showed retail sales rose less than expected in June, sending the Canadian dollar sharply lower.
Potash Corp fell for the first time seven days, ending down 0.23 percent at C$157.80. The stock had been pushed up on market speculation it would attract a higher takeover bid from BHP Billiton, or possibly another player.
BHP has offered about $39 billion, or $130 a share, for Potash.
Reporting by Jennifer Kwan