April 11, 2008 / 3:22 PM / in 10 years

UPDATE 2-Toronto stocks hit hard by GE results

(Adds details and analyst comments)

TORONTO, April 11 (Reuters) - Toronto’s main stock market index dropped sharply on Friday morning as disappointing results from U.S. bellwether General Electric (GE.N) stoked worries that the U.S. economic slowdown is far from over.

The Toronto Stock Exchange’s key S&P/TSX composite index .GSPTSE was down 166.37 points, or 1.2 percent, at 13,743.21.

All 10 of the TSX index’s main groups were lower with the resource-laden materials group down 1.3 percent and the heavily weighted financial group off 1.5 percent.

The market pushed the panic button after GE reported a disappointing first-quarter profit and lowered its earnings forecast for the year, stirring recession fears, as a slowdown in the U.S. economy and the credit crisis hit the company’s financial, industrial and health-care units.

“Yes it is a very major U.S. corporation and maybe people are trying to read into it in terms of potential incremental fallout and negativity,” said Irwin Michael, a portfolio manager at ABC Funds.

The Toronto market’s financial institutions the brunt of the blow.

Canadian insurer Sun Life Financial (SLF.TO) dropped C$1.50 to C$46.0.0 and Manulife Financial (MFC.TO) was off C$1.09 at C$38.11.

Bank of Nova Scotia (BNS.TO) was off 83 Canadian cents at C$45.90, and Royal Bank of Canada (RY.TO), the country’s biggest bank, was down 68 Canadian cents at C$46.60.

A report late on Thursday said that Scotiabank has jumped into the bidding for U.S.-based National City NCC.N bank. A Scotiabank spokesman refused to comment on the report.

Energy shares, which account for almost one-third of the overall index, dropped as the price of U.S. crude fell to $109.48 a barrel as traders digested a lower demand forecast from the International Energy Agency.

Suncor Energy (SU.TO) was off C$2.06 at C$107.78, and Canadian Natural Resources (CNQ.TO) dropped 71 Canadian cents to C$79.11.

Materials shares slipped despite firm base metal and gold prices. Barrick Gold (ABX.TO), the world’s biggest gold producer, was off 85 Canadian cents at C$44.15, and base metals giant Teck Cominco TCKb.TO was off C$1.28 at C$46.52.

Canadian media companies were among the gainers on Friday following mixed results.

Cogeco Inc CGO.TO added C$1.09 to C$32.24, while Shaw Communications (SJRb.TO) gained 31 Canadian cents to C$20.52.

Shaw, Canada’s No. 2 cable and satellite TV company, said on Friday that second-quarter net profit more than tripled, lifted by a C$188 million ($184 million) tax recovery, strong subscriber gains and higher prices. ($1=$1.02 Canadian) (Reporting by Scott Anderson; Editing by Peter Galloway)

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