TORONTO (Reuters) - Canada’s main stock index on Tuesday saw its weakest close in more than two years as continued pressure on crude oil weighed on sentiment in the resource-linked market.
“What started the day on the wrong foot was the November trade data from China,” said Ben Jang, portfolio manager at Nicola Wealth Management, adding that slower economic growth from China is weighing on global markets.
The drop in U.S. crude oil prices below $40 a barrel has been taken as an indication that “global demand is weak,” according to Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.
Oil futures ended lower after plumbing near seven-year lows on fear that global oil producers will pump even more crude in a battle for market share in a saturated market.
The biggest weight on the index were the major banks, which last week all reported a rise in bad loans in the energy sector from a year earlier. Investors worried that this could turn into more writedowns and losses.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 120.38 points, or 0.92 percent, to 12,922.45, its weakest close since October 2013.
Intra-day, the market hit its weakest level since Aug. 24.
That August low came in the midst of a global market rout that pulled Chinese stocks down 9 percent and sent commodity prices tumbling. The S&P/TSX has been under 13,000 points only once since then, and before that not since October 2013.
The overall financials group dropped 1.5 percent, while industrials were down 1.7 percent and materials fell 1.2 percent.
Rival Canadian National Railway Co (CNR.TO) fell 1.4 percent to C$72.98.
Valeant Pharmaceuticals International Inc VRX.TO added 2.5 percent to C$127.52. Reuters reported that the company was seeking potential buyers for its specialty contact lens manufacturing division, according to two sources.
The energy group gained 0.8 percent after plunging 5.9 percent on Monday.
U.S. crude oil CLc1 settled at $37.51 a barrel, down 0.37 percent, while Brent crude LCOc1 lost 1.3 percent to $40.2.
Additional reporting by Alastair Sharp; Editing by Lisa Von Ahn and James Dalgleish