TORONTO (Reuters) - Canada’s main stock index dropped on Monday, touching its lowest point in almost three weeks, led by weaker energy stocks as U.S. crude oil fell, with investors worried about the euro zone debt crisis ahead of a major summit this week.
Global equity markets fell on investor skepticism that the June 28-29 European Union summit would produce substantive measures to tackle the debt crisis. <MKTS/GLOB>
U.S. crude prices were also lower on summit doubts and as the first named storm to hit the Gulf of Mexico this Atlantic hurricane season missed production-rich areas. <O/R>
“If Europe brings the global economy into a big recession, there’s a huge risk to the Canadian market because of its exposure to resources,” said Marc-Andre Robitaille, president and portfolio manager at Robitaille Asset Management in Montreal.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 105.15 points, or 0.92 percent, at 11,330.39. The index at one point hit 11,295.06, its weakest level since June 4.
“Europe remains a very large cause for concern,” said Marco Lettieri, economist at National Bank Financial in Montreal. “As a result there’s a high risk premium that continues to be put on to the market.”
The heavyweight oil and gas group played the biggest role in leading the market lower, dropping 2.1 percent. Financial issues declined 1.4 percent.
Encana Corp (ECA.TO) was also among the major weights on the index, losing 3.7 percent to hit C$19.61.
In addition to weaker energy prices, a Reuters investigation found that Encana plotted with Chesapeake Energy Corp (CHK.N) to suppress land prices in Michigan. In response to questions from Reuters on the matter, Encana said it was undertaking an internal investigation.
Research In Motion RIM.TO fell 7.5 percent after a Morgan Stanley analyst said the BlackBerry maker would have to shrink considerably to survive.
Losses in energy and bank stocks were partly offset by gains in the materials group, helped by gold miners and fertilizer producers.
Goldcorp Inc (G.TO) rose 3.2 percent to C$39.17 as euro zone worries boosted safe-haven buying of bullion. <GOL/>
Potash Corp POT.TO rose 2.1 percent to C$42.24 and Agrium Inc AGU.TO was 1.2 percent higher at C$87.86 after corn futures rose on the Chicago Board of Trade as dry weather threatened to cause more harm to the U.S. corn crop.
Shares of the fertilizer makers typically track the prices of fertilizer-intensive corn closely as higher grain prices are likely to spur farmers to increase their use of crop nutrients.
Additional reporting by Jennifer Kwan; Editing by Jeffrey Hodgson; and Peter Galloway