September 4, 2008 / 9:39 PM / 10 years ago

UPDATE 3-Toronto stocks dive to 5-month low on growth woes

* TSX falls more than 320 points

* Racks up loss of 7 percent for week so far

* Hit by fears of slower growth, weak resource demand (Adds details, quotes)

By Leah Schnurr

TORONTO, Sept 4 (Reuters) - The Toronto Stock Exchange’s main index skidded to it lowest in more than five months on Thursday, battered by worries about slowing global growth and the impact that will have on the demand for resources.

Concerns over weakness in the U.S. labor market and a drop in prices for oil, gold and other metals also combined to knock the Toronto benchmark down more than 2 percent — bringing its losses over three days to 7 percent.

The price of crude, a key underlying factor for the energy-heavy index, slumped anew as worries over demand overshadowed a drop in U.S. inventories. Canadian Oil Sands Trust COS_u.TO was down 5 percent at C$44.95.

The materials sector, home to resource shares, also dragged as gold producers and other miners fell. Fertilizer firm Potash Corp of Saskatchewan POT.TO slid 2.5 percent to C$160.37.

“It’s not just the Toronto market, it’s markets around the world,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier. “It’s just a general lack of confidence in the overall market.”

The S&P/TSX composite index .GSPTSE closed down 323.58 points, or 2.46 percent, at 12,814.14 with all 10 of its main sectors ending lower.

With a drop of more than 950 points since Tuesday, the TSX is in its deepest slide since January when it lost more than 1,560 points in a five-day beating sparked by worries over global and U.S. economic health.

The materials and energy sectors gave up 3 percent and 2.3 percent, respectively. Among laggards in the oil patch, Canadian Natural Resources (CNQ.TO) slipped 1.5 percent to C$80.79.

“The reaction of the market smacks of panic on the part of a lot of investors,” said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd., in Calgary of the sell-off in the energy sector.

“We all knew in the slowdown there was going to be lessening demand out of North America and possibly out of the OECD countries, but you still have very, very strong demand out of the Asian complex and developing markets.”

Research In Motion RIM.TO, the maker of the BlackBerry, fell 5.6 percent to C$115.13 as the tech group was hurt by fears of softening corporate spending. The group as a whole lost 1.9 percent.

Data out of the United States added to the unease after a report showed a steadily declining labor market, fueling concerns about the economic prospects for Canada’s biggest trading partner.

Shares of MDS Inc MDS.TO slid 5.6 percent to C$14.85 after the health sciences company reported a weaker third quarter and cut its full-year outlook. See: [ID:nN04266672].

Market volume was 444 million shares worth C$7.7 billion. Decliners outpaced advancers 1,133 to 420. The blue chip S&P/TSX 60 index .TSE60 closed down 19.38 points, or 2.47 percent, at 764.28.

In New York, stocks also logged a steep decline following the labor market data that fueled fears about the resiliency of the U.S. economy.

The Dow Jones industrial index .DJI closed down 344.65 points, or 2.99 percent, at 11,188.23, and the Nasdaq Composite Index .IXIC slid 74.69 points, or 3.2 percent, to 2,259.04. ($1=$1.07 Canadian) (Editing by Frank McGurty)

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