May 7, 2010 / 3:56 PM / in 8 years

CANADA STOCKS-TSX slides on energy weakness, Europe fears

   * TSX down 187.73 points, or 1.59 pct, at 11,654.70.
 * Oil price drop drives energy sector lower
 * Investors fearful after Thursday plunge
 * Euro zone contagion fears still weigh
 By Jeffrey Hodgson
 TORONTO, May 7 (Reuters) - Canadian stocks fell on Friday, with heavily weighted energy shares following crude prices lower and investors fearful following Thursday’s stunning selloff and concerns Greece’s debt crisis will widen.
 Toronto’s main stock index .GSPTSE fell as much as 3.8 percent on Thursday, its steepest one-day percentage fall since June 2009, before ending just 0.28 percent lower.
 The mystery surrounding the magnitude of the drop spurred some market players to lighten equity holdings.
 Persistent fears that Greece’s debt woes will infect other euro zone countries and jeopardize the global economic recovery also hit prices. Canada is a major exporter of commodities including oil, gold and base metals.
 “The drop in oil prices is a major contributor since energy is such a large part of the overall index. But I think that’s just reflecting overall nervousness about what the impact of the debt crisis in Europe is going to be,” said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.
 “People are worried about basically will this slow growth in the rest of the year?”
 At 11:25 (15:25 GMT), the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE was down 187.73 points, or 1.59 percent, 11,654.70.
 U.S. crude oil futures fell sharply in choppy trading as concerns about Greek fiscal problems spreading and uncertainty after Thursday’s volatile moves offset a positive U.S. nonfarm payrolls report. [O/R]
 Energy shares .SPTTEN, down more than 2 percent, were among the heaviest decliners. Suncor Energy Inc (SU.TO) fell nearly 3 percent to C$31.47, while Canadian Natural Resources Ltd (CNQ.TO) fell 2.5 percent to C$70.90.
 Canadian Natural fell even though it reported a first-quarter profit on Thursday that more than doubled on higher oil production and stronger prices. [ID:nN0598066]
 “We’re still in the aftershocks of yesterday’s spectacular plunge,” said Rick Hutcheon, president and chief operating officer at RKH Investments.
 “Yesterday would shake people’s confidence ... Greece and the whole European mess doesn’t seem to be resolved. There’s a lot of uncertainty and managers’ normal reaction to uncertainty is to sell, take money off the table.”
 Euro zone contagion fears more than offset a report that showed a record number of Canadians returned to work in April, stunning markets and adding pressure on the Bank of Canada to raise interest rates in June, ahead of other major industrialized countries. [ID:nN0793308]
 CRYPTOLOGIC, DRAGONWAVE SINK
 Other active stocks included Iamgold (IMG.TO), which fell nearly 3 percent even after it said on Thursday its first-quarter profit rose 12 percent on higher gold prices. [ID:nSGE6460IR]
 Shares of Internet casino and gaming software company CryptoLogic Ltd CRY.TO fell more than 7 percent after it posted a bigger quarterly loss, hurt by subdued wagering activity.
 Stock in DragonWave Inc DWI.TO, a maker of radio transmitters used in cellular networks, fell as much as 20 percent, a day after the company reported lower-than-expected quarterly results on higher costs.
 ($1=$1.04 Canadian)  (Editing by Peter Galloway)   

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