TSX plunges 4 percent, S&P downgrade stokes fears

Mon Aug 8, 2011 7:50pm EDT
 
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By Trish Nixon

TORONTO (Reuters) - Toronto's main stock index plunged to its lowest level in nearly a year on Monday, tracking a fall in world equities and commodity prices, on rising fears of a U.S. recession exacerbated by the United States' loss of its triple-A credit rating.

The index, which saw its biggest intraday slide since March, 2009, closed down more than 4 percent as the U.S. downgrade hammered investor confidence across the globe.

"It's a pretty scary day," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.

"It's not just the ratings downgrade in the U.S. It's also intensifying concern about the impact the ratings downgrade would have on global economic growth, and you are seeing that manifest itself in a sell-off in energy and material prices."

The energy sector led the index's dive, dropping 7.21 percent as oil plunged 5 percent, crashing below technical support levels. Suncor Energy was the most influential decliner, down 6.93 percent at C$30.10. Canadian Natural Resources lost 6.2 percent to trade at C$33.05.

The financial sector, down 3.69 percent, also weighed heavily. Royal Bank of Canada down 3.1 percent at C$48.51, and Manulife Financial, which shed 8.3 percent to C$12.53, were leading decliners.

The Toronto Stock Exchange's S&P/TSX composite index closed down 491.21 points, or 4.04 percent, to 11,670.96.

Earlier in the session it fell to 11,617.81, its biggest intraday fall in more than two years and its lowest point since August 25.   Continued...

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