TSX dives 3 percent as recession fear grips market

Thu Aug 18, 2011 5:09pm EDT
 
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By Claire Sibonney

TORONTO (Reuters) - Toronto's main stock index tumbled more than 3 percent on Thursday, rattled by fears that the world economy might fall into a new recession and the possibility that the European debt crisis might spread to the U.S. banking sector.

All 10 of the TSX index's main sectors were down sharply, though some gold miners rallied on record bullion prices and financial shares lost less than their U.S. counterparts, helping the index outperform markets south of the border.

U.S. indexes were down around 4-5 percent, while U.S. oil futures plunged more than $5 a barrel and other commodity prices also sold off.

The Toronto Stock Exchange's S&P/TSX composite index closed down 392.90 points, or 3.12 percent, at 12,186.71, its lowest close since August 9.

Among the heaviest decliners, Suncor Energy plunged 6.5 percent to C$29.67, Canadian Natural Resources lost 6.2 percent to C$33.91, and Potash Corp dropped 5.2 percent to C$51.38.

"When people woke up this morning, the glass wasn't half full, it was empty," said Paul Hand, managing director at RBC Capital Markets.

Hand said he would describe the collective mood of investors as "manic" given the malaise in the global economy and Europe's spreading debt crisis.

Morgan Stanley said on Thursday the United States and the euro zone were "dangerously close to recession", while an onslaught of disappointing U.S. economic data, including factory activity, home resales, jobless claims and inflation, added to the gloomy mood.   Continued...

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