CANADA STOCKS-TSX tumbles to three-month low as sentiment sours

* TSX down 226.97 points, or 1.5 percent, at 14,893.57
    * Eight of the 10 main index sectors decline
    * Valeant shares jump as ValueAct executive to join board

    By John Tilak
    TORONTO, Sept 25 (Reuters) - Canada's main stock index
dropped 1.5 percent on Thursday, its worst fall in 7-1/2 months,
as negative sentiment for equities and choppy commodity prices
helped drag down shares in most major sectors. 
    Investors brushed aside data showing that new orders for
capital goods by U.S. businesses bounced back in August, while
separate figures showed a smaller-than-expected rise in weekly
jobless claims. 
    The benchmark TSX index fell for a fifth straight session to
hit a three-month low, led by declines in the heavyweight energy
and financial sectors.
    Market volatility shot up and commodity prices remained
choppy. A surge in the U.S. dollar to a four-year high was also
seen as a negative for equities.
    "It's one of those days when you wake up and look at all the
headlines, and they seem very bad for stocks," said Marcus Xu,
president and portfolio manager at M.Y. Capital Management Corp
in Vancouver. "The market seems to want to take a break here and
sell off." 
    He said that even though market fundamentals are still
intact, the market could go even lower before rebounding. He
added that he expects the Canadian market to provide slightly
better returns than U.S. stocks this year.
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 226.97 points, or 1.5 percent, at
14,893.57. Eight of the 10 main sectors on the index were in the
    Financials, the index's most heavily weighted sector,
dropped 2 percent. Toronto-Dominion Bank shed 2.8
percent to C$54.85, and Bank of Nova Scotia lost 1.7
percent to C$68.91.
    Shares of energy producers gave back 2.1 percent. Canadian
Natural Resources Ltd declined 2.1 percent to C$43.21,
and Suncor Energy Inc fell 1.4 percent to C$40.29.
    Valeant said it had named the head of a top shareholder,
ValueAct Capital, to its board of directors and vowed to
continue with its hostile takeover attempt on Botox maker
Allergan Inc. ValueAct signaled that it planned to
increase its stake in Valeant. 
    Valeant shares jumped 3.2 percent to C$141.66, helping to
keep the index's healthcare sector in positive territory.
    ($1=$1.11 Canadian)

 (Editing by Peter Galloway)