April 23, 2012 / 3:18 PM / 7 years ago

CANADA STOCKS-TSX sinks nearly 2 percent on Europe fears

* TSX down 216.14 points, 1.8 pct, at 11,931.14
    * Biggest drop for index in more since December

    TORONTO, April 23 (Reuters) - Toronto's main stock index
tumbled nearly 2 percent in early Monday trade, its biggest drop
in more than four months as weak European data and political
tension in France and the Netherlands heightened concerns about
the euro zone's ability to tackle its debt crisis. 	
    All 10 sectors were down sharply. Prices for key commodities
oil, gold and copper also sold off, weighing heavily on Canada's
resource-heavy market.   	
    The most influential movers on the downside included Barrick
Gold, down almost 3 percent to C$38.83, Goldcorp Inc
, down 3.7 percent to C$39.52 and Toronto-Dominion Bank
, off 1.6 percent to C$82.60.	
    "The political developments in Europe have highlighted a
pushback against austerity measures and the data out of the euro
zone disappointed and overshadowed what was an improvement in
China's flash PMI," said Fergal Smith, managing market
strategist at Action Economics.	
    The economic outlook for Europe was hurt by poor flash
Purchasing Manager's Indexes (PMIs) for April, which are a guide
to future activity. The reports for the euro zone, Germany and
France pointed to a much faster rate of economic contraction
across the debt-laden region than had been expected. 	
    The gloomier view increased as Dutch Prime Minister Mark
Rutte said on Monday he has tendered his cabinet's resignation
to the Dutch Queen, adding that she will consider it and has
asked in the meantime for the government to keep doing whatever
was in the country's interest. 	
    The Dutch government, a close ally to Germany, has been
calling for tougher austerity measures to fight the crisis.
    Investors also were absorbing the implications of the
victory in the first round of France's presidential poll of 
Socialist Francois Hollande, who has promised to renegotiate a
European budget pact. 	
    At 10:36 a.m. (1436 GMT), the Toronto Stock Exchange's
S&P/TSX composite index was down 216.14 points, or
1.78 percent, to 11,931.14. Earlier, the TSX hit as low as
11,919.13, its lowest level in nearly two weeks and the index's
steepest drop since December.	
    Smith said the TSX was now targeting a test of the April low
of 11,869 and the 50 percent retracement of the October-March
rally that comes in at 11,818, for further support.	
    On the brighter side, a private sector purchasing managers
survey from China showed factories posted their best performance
this year as a measure of new business rose from multi-month
lows, though overall activity still contracted for a sixth
successive month. 	
    "Taken in isolation, the Chinese PMI would have been
constructive," added Smith.	
    "Our view is it is consistent with a soft landing in China
... on balance it still maintains hope for policy easing in
China as well."
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