June 1, 2010 / 8:32 PM / in 7 years

CANADA STOCKS-TSX slides as growth fears hit oil hard

*TSX falls 191.02 points, or 1.6 percent, to 11,571.97

*Energy, financial shares leads index lower (Updates to close, adds details, quotes)

By Claire Sibonney

TORONTO, June 1 (Reuters) - Toronto’s main stock index ended sharply lower in volatile trading on Tuesday after sluggish global manufacturing data caused concern about the pace of economic recovery, punishing oil prices and the TSX’s powerhouse energy sector.

Energy shares sank 3.3 percent with Suncor Energy Inc (SU.TO), the country’s biggest oil producer, shedding 1.9 percent to C$31.89, and EnCana Corp (ECA.TO), Canada’s largest natural gas producer, dropping 3.2 percent to C$32.18.

Data showed manufacturing growth slowed in the euro zone and China, but there was some relief in the United States, where there was scant evidence of an impending slump. [ID:nN01231825]

Still, oil fell nearly 2 percent to below $73 a barrel in choppy trade.

The index’s financial shares were fickle throughout the day, trading in positive and negative territory, before settling 0.5 percent lower.

Bank of Nova Scotia (BNS.TO), however, rose 2.6 percent to C$49.52 after reporting stellar quarterly results. [ID:nN28202192]

“Best results out of any of the Canadian banks, blew the doors off even with a significant currency impact,” said Barry Schwartz, vice-president and portfolio manager at Baskin Financial Services.

Royal Bank of Canada (RY.TO), the country’s biggest lender, fell 1.7 percent to C$54.20, extending its decline after posting earnings last week that fell short of high market expectations.

“After the selloff in May, banks are now trading at quite a reasonable valuation. I don’t know what people are worried about,” Schwartz said.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended 191.02 points, or 1.62 percent, lower at 11,571.97. The index see-sawed for much of the day.

“It’s a familiar pattern, something that we’ve seen in previous days as well, where you have a bout of nervousness in the last hour of trading and the market seem to give up the gains of the day,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

In a move much anticipated by the market, the Bank of Canada raised its key interest rate to 0.5 percent from 0.25 percent on Tuesday, making Canada the first Group of Seven country to raise rates since the start of the recession. But the European debt crisis may make the bank’s next rate move highly unpredictable. [ID:nN01103957] ($1=$1.05 Canadian) (Reporting by Claire Sibonney; Editing by Peter Galloway)

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