(Adds analyst Johnston’s comments, market reaction, updates trading)
* TSX down 183.36 points, or 1.33 percent, to 13,553.64
* Nine of the TSX’s 10 main groups fall
By Solarina Ho
TORONTO, Aug 21 (Reuters) - Canada’s main stock index sank on Friday to its lowest in 1-1/2 years on persistently grim global sentiment following more disappointing data out of China.
Global equity markets plummeted toward their worst week this year while the beating in commodities continued as data out of China showed manufacturing in the country was slowing at the fastest pace since the financial crisis in 2009.
The commodities-heavy TSX took another drubbing, with energy stocks falling 1.4 percent and materials sliding 1.7 percent. The hefty financials group, which also reports quarterly results next week, fell 1.5 percent.
“We’re really breaking some really key levels. It’s a sign that we’re in a very severe correction. It’s being driven by a continued slowdown in the global production cycle, which is so important for the demand for commodities,” said John Johnston, chief strategist at Davis-Rea, adding that emerging markets have been a risk for some time.
“Unless they start to stabilize and turn up, they could become a big problem. I’m starting to get worried they’re going to drag the global economy into a recession.”
Canadian Natural Resources fell 2.8 percent to C$26.77.
Crude prices headed for their longest losing streak since 1986 following the dismal Chinese data, which also sent copper prices down. U.S. oil futures tumbled 3.1 percent to $40.06 a barrel, while three-month copper on the London Metal Exchange dropped 1.4 percent to $5,048.50 a tonne.
At 11:31 a.m. EDT (1531 GMT), the Toronto Stock Exchange’s S&P/TSX composite index had tumbled 183.36 points, or 1.33 percent, to 13,553.64, after dropping as low as 13,570.26, a level not seen since February 2014.
Johnston expects to see an intermediate rally in the fall, but said there was a serious risk of a bear market next year.
“It’s going to fizzle. Right now, cash is king,” he said.
Of the index’s 10 main groups, only telecoms were on higher ground, up 0.7 percent. Most other sectors fell more than 1 percent, including consumer staples, which slumped 1.9 percent.
Convenience store operator Alimentation Couche-Tard lost 4.6 percent to C$55.35.
Royal Bank of Canada fell 1.4 percent to C$73.06 and was among the biggest drags on the TSX. Manulife Financial Corp was down 3.1 percent at C$20.66.
In corporate news, Eldorado Gold Corp shares plunged 12.3 percent to C$4.57 after the company said on Thursday it suspended mining activities in northern Greece.
Declining issues outnumbered advancing ones on the TSX by 220 to 24, for a 9.17-to-1 ratio on the downside. The index posted two new 52-week highs and 58 new lows. (Reporting by Solarina Ho; Editing by James Dalgleish)