March 5, 2009 / 10:03 PM / 10 years ago

CANADA STOCKS-TSX rattled by economic worries, oil price

* TSX ends down 2.37 percent at 7,629.17

* Decline wipes out all of Wednesday gains

* U.S. bank concerns and weaker oil blamed for selloff (Adds comments, details, official numbers)

By Frank Pingue

TORONTO, March 5 (Reuters) - Toronto’s main stock index closed lower on Thursday, relinquishing all the gains made during the previous session, as nagging concerns about the global economic outlook shook the resource-heavy index.

Financial issues headlined the Toronto Stock Exchange’s latest decline with investors uneasy about the status of major U.S. banks. Energy shares also contributed to the selloff as oil prices tumbled on concerns about demand.

Royal Bank of Canada (RY.TO) closed 4.45 percent lower at C$29.22, while EnCana Corp (ECA.TO), Canada’s biggest energy company, fell 3.4 percent to C$48.56.

News that China opted not to announce an expansion of its economic stimulus plan got the Toronto index off to a lower start as hopes for new stimulus measures by Beijing had supported equity rallies in the previous session.

Thursday’s selloff was the latest display of how little confidence investors have in stocks, considering the index has been unable to string together any sustainable gains after falling earlier this week to its lowest level in more than five years.

“We had a bounce yesterday in tandem with global markets and so we’ve basically unwound that rally,” said Fergal Smith, managing market strategist at Action Economics.

“Yesterday, the market took some insurance against the possible addition of a China stimulus plan, so when that didn’t materialize overnight, equity markets globally turned lower and so Canada tracked Wall Street lower.”

News from General Motors (GM.N), warning of possible bankruptcy, and nagging concerns about the fate of the U.S. banking system were also key issues that sent investors out of stocks.

The S&P/TSX composite index .GSPTSE closed down 185.58 points, or 2.37 percent, at 7,629.17, on the heels of a 183-point, or 2.4 percent, rally on Wednesday.

Nine of the TSX’s 10 sectors ended lower. The financials index fell 4.97 percent, the steepest drop among all groups, while energy stocks ended down 3.09 percent.

The only gainer on the day was the materials sector, up 3.22 percent on strength in gold mining issues as the price of gold jumped more than 2 percent.

Shares of Goldcorp (G.TO) rallied 8.5 percent to C$38.45 to help cushion the index’s drop, while Barrick Gold Corp (ABX.TO) shares rose 4.9 percent to C$36.99.

The U.S. government is intervening with a massive stimulus package to try and snap the economy’s alarming downward spiral. But investors have yet to show much interest in moving back into equities with any degree of confidence.

“People don’t trust the government responses to the problems and they just don’t want to take any risk,” said Mario Richard, senior portfolio strategist at Sceptre Investment Counsel. “And (the stock market fall is) driven by the lack of confidence in the financial institutions in the United States and probably Europe and Asia.” (Editing by Peter Galloway)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below