October 7, 2014 / 11:49 AM / in 3 years

TSX tumbles on global growth worries, German data

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014. REUTERS/Mark Blinch

TORONTO (Reuters) - Canada’s main stock index dropped on Tuesday as a sluggish global growth forecast and weak data from Germany fueled a selloff in equities and oil prices.

In turn, the decline in the price of oil pushed down the energy sector, which had the biggest negative influence on the market. The benchmark TSX is off about 7 percent since hitting a record high last month.

Investors digested data showing that German industrial output plunged in August staging its steepest drop since the height of the financial crisis.

Meanwhile, the International Monetary Fund cut its global economic growth forecasts for the third time this year, warning of weaker growth in core euro zone countries, Japan and big emerging markets such as Brazil.

“(The data) does have an impact on the TSX because it’s levered to global growth,” said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.

“The bigger issue is whether this signals the end of the bull market or if it is just seasonal jitters,” he added. “This is a much-needed tempering of global growth prospects and the rampant bullishness we’ve seen in recent months.”

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE unofficially ended down 166.67 points, or 1.13 percent, at 14,576.45. Nine of the 10 main sectors on the index were in the red.

Shares of energy producers dropped 1.9 percent, reflecting lower oil prices. Suncor Energy Inc (SU.TO) shed 2.6 percent to C$38.53 ($34.49), and Talisman Energy Inc TLM.TO dropped 2.5 percent to C$8.81.

The materials sector, which includes mining stocks, weakened as trading in commodity prices was choppy. Teck Resources Ltd TCKb.TO declined 4.6 percent to C$18.92, and Barrick Gold Corp (ABX.TO) lost 3.8 percent to C$15.24.

Editing by James Dalgleish and Diane Craft

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