TORONTO (Reuters) - Canada’s main stock index tumbled nearly 2 percent to its lowest level since early September on Wednesday, hit by worries about U.S. budget negotiations and European debt, and by a big drop in miner Iamgold Corp (IMG.TO) after it reported weak results.
The market tracked a dramatic decline on Wall Street, where shares tumbled to late-July levels as investors grappled with the possible repercussions of the U.S. “fiscal cliff,” a series of mandated tax hikes and spending cuts that start to take effect early next year. .N
The index’s materials sector, which includes mining stocks, plunged 3.5 percent, with Iamgold down nearly 20 percent at C$11.98 after it reported lower-than-expected quarterly earnings on Tuesday and cut its production target for 2013.
Also holding the market’s attention was the debt crisis in Europe, where there was a wave of strikes to protest spending cuts and tax hikes contained in austerity programs. <MKTS/GLOB>
Some investors expect focus will soon return to China, said Youssef Zohny, portfolio manager with Stenner Investment Partners, a unit of Richardson GMP.
“After the dust settles, investors are going to start to look at the economic fundamentals, especially at what’s happening in China,” he said. The policies that will be unveiled by China’s new government will have a big impact on the resource-heavy Canadian market, he added.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended down 204.87 points, or 1.7 percent, at 11,929.79. Nine of the index’s 10 sectors were lower. The consumer staples group rose 0.3 percent.
During the session, the index hit 11,915.07, its lowest point since September 4.
Toronto’s heavily weighted materials and energy groups were hit hard because they are the most economically sensitive, said Gavin Graham, president of Graham Investment Strategy.
“When people have concerns about the pace of economic growth, particularly in the United States but also in China, then they tend to sell off,” he said.
Shares of Research In Motion RIM.TO were up 1.3 percent at C$8.51. RIM’s new line of BlackBerry 10 devices will provide the company with a framework for growth over the next decade, offering long-term value for shareholders, Chief Executive Thorsten Heins told Reuters in an interview.
Rona Inc RON.TO was up nearly 5 percent at C$11.52 after a large shareholder called for the replacement of the home improvement retailer’s board, leading to a revival of takeover talk.
Loblaw Cos Ltd (L.TO) was up 0.9 percent at C$33.64 after the grocer raised its dividend.
Additional reporting by Claire Sibonney; Editing by Peter Galloway