TORONTO (Reuters) - Canada’s main stock index fell to a near five-month low on Wednesday in a broad selloff, with resource stocks showing the biggest declines, on mounting worries about global economic growth and weak U.S. earnings.
Oil prices also tumbled on demand concerns, and weighed on oil and gas shares, which dropped 2.6 percent. <O/R>
Investors were disappointed by U.S. quarterly reports from companies such as Bank of America Corp (BAC.N) and Yahoo Inc YHOO.O. .N
Toronto stocks are down almost 4 percent this year as weak commodity prices have weighed on resource shares, which make up about 40 percent of the index.
“It’s just a very skittish market,” said Diana Avigdor, portfolio manager and head of trading at Barometer Capital Management. “You cannot fight the tape when the selling is for another reason than fundamentals.”
However, she said the excessive selling could result in a rebound. “At some point in the next couple of weeks we could see a violent ‘melt-up’ because the market is oversold.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 172.63 points, or 1.42 percent, at 11,947.29. The index earlier fell to 11,916.64, its lowest point since November 19.
Nine of the 10 main sectors on the index were in the red.
“We’re certainly in some form of correction,” said Michael Sprung, president of Sprung Investment Management. “The market was ahead of itself, and we’re taking a definite setback.”
The materials sector had the biggest decline, giving back 3.8 percent due to a more than 7 percent decline in base-metals miners and a 4.3 percent fall in gold miners.
Miner First Quantum Minerals Ltd (FM.TO) shed 9.4 percent to C$15.43, virtually erasing the gains it made the previous day.
The price of bullion, which recorded its biggest fall ever on Monday, was up 0.5 percent but did not stem the slide in gold miners. <GOL/>
Barrick Gold Corp (ABX.TO) shed 5.6 percent to C$18.17 and played the biggest role of any single stock in leading the index lower.
Financials, the index’s most heavily weighted sector, lost 0.8 percent.
Editing by Peter Galloway