December 4, 2014 / 12:52 PM / 4 years ago

TSX drops most in 18 months as TD, energy shares tumble

TORONTO (Reuters) - Canada’s main stock index recorded its biggest single-day drop in 18 months on Thursday as weakness in the price of oil fueled a sell-off in shares of energy producers and Toronto-Dominion Bank (TD.TO) fell after the lender reported quarterly results.

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch

TD reported a weaker-than-expected fourth-quarter profit and said it expects a more challenging operating environment in 2015. The stock shed 5.1 percent to C$54.03.

Enbridge shares shot up 10.5 percent after the company said late on Wednesday it will transfer its Canadian liquids pipelines business and certain renewable energy assets to an affiliate and raised its quarterly dividend by a third.

The gains were not enough to prevent the bruising the broader benchmark suffered, with energy prices losing 5 percent, with the biggest negative impact.

News of Saudi Arabia making deep price cuts for U.S. and Asian buyers sent the price of oil LCOc1 lower. Both energy shares and oil prices have been in a freefall since June.

“I’m concerned that it’s more of a value trapped in a value opportunity,” said Myles Zyblock, chief investment strategist at Dynamic Funds, of valuations in the energy group.

“You’re seeing rip-your-face-off rallies followed by rip-your-face-off sell-offs,” he added. “That’s what’s going to play out in the next few months.”

Zyblock said investors in the Canadian energy sector should look for companies with clean balance sheets and strong production profiles.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 284.11 points, or 1.93 percent, at 14,469.95. All of the 10 main sectors on the index were in the red.

Shares of energy producers fell, with Suncor Energy Inc (SU.TO) losing 3.9 percent to C$35.89 and Canadian Natural Resources Ltd (CNQ.TO) down 4.4 percent to C$37.21.

Financials, the index’s most heavily weighted sector, gave back 2.2 percent. Bank of Nova Scotia (BNS.TO) lost 2 percent to C$67.58.

Editing by James Dalgleish and Dan Grebler

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