* Materials group falls 6.4 percent to lead slide
* Energy sector next in line with near 4 percent skid
* TSX now down 2 percent in 2009 (Adds details and comments)
By Frank Pingue
TORONTO, Jan 12 (Reuters) - Toronto’s main stock index fell more than 3 percent on Monday as tumbling commodity prices rattled the resource-heavy index and knocked it to its lowest closing level in two weeks.
The market tumbled more than 100 points at the open and was never able to recover as prices for key Canadian exports such as oil and gold were hammered throughout the session.
“It’s been red since they rang the bell this morning,” said Bruce Latimer, a trader at Dundee Securities. “You’ve got gold down, oil down, commodities down and the Canadian dollar is down and that’s going to take our market with it.”
The slide was headlined by sharp selloffs in the energy and materials sectors, which together make up about 40 percent of the overall index.
The materials group, which is home to gold-mining stocks, led the market lower with a 6.41 percent skid, followed by a 3.98 percent drop in the energy sector.
Weighing on gold-mining stocks was a 4 percent drop in gold prices to a one-month low as the U.S. dollar rallied against the euro on expectations of an interest rate cut in the euro zone later this week.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 291.85 points, or 3.21 percent, at 8,793.33.
Toronto’s key index had charged out of the gate in 2009 with a string of solid gains that had it up 5.76 percent midway through last week.
But a few losing sessions, mostly at the hands of lower commodity prices, have stripped it of all its gains and left it down 2 percent for the year.
Part of the drag is being attributed to a growing number of investors who feel there is not any evidence that the economy is going to see any real recovery any time soon.
“People have digested some of the reports that have come out last week — some broader-looking reports in terms of how they feel 2009 will roll out and it’s pretty pessimistic in terms of how the economy is going to perform,” said Brian Pow, vice president, research and equity analyst at Acumen Capital Partners, in Calgary.
The energy sector fell in the face of a 8 percent drop in oil prices as the growing impact of an economic recession continues to convince investors that global energy consumption will be sapped.
On Wall Street, stocks fell on nagging concerns about the fourth-quarter earnings that U.S. companies start to report this week, which could spotlight further deterioration in the economy there.
The Dow Jones industrial average .DJI fell 125.21 points, or 1.46 percent, to 8,473.97, while the Nasdaq Composite Index .IXIC ended down 32.80 points, or 2.09 percent, at 1,538.79.
$1=$1.22 Canadian Additional reporting by Natalie Armstrong; editing by Peter Galloway