(Corrects figure in first paragraph to $700 billion from $700 million)
*Financials drop on uncertainty over U.S. bailout fund
*Loblaw rises sharply after quarterly results
*CP sags after says to cut 2009 capital investment (Adds details, updates figures)
TORONTO, Nov 13 (Reuters) - Toronto Stock Exchange’s main index was lower late on Thursday morning on weakness in the information technology and financial sectors, with financials hit by uncertainty after Washington backed away from using the $700 billion bailout fund to buy up toxic mortgages.
Among heavily weighted stocks that pushed the market lower was Research In Motion RIM.TO, down 7.8 percent at C$49.40. Earlier, brokerages Raymond James and UBS cut their share-price targets on the company. The information technology sector was down 2.5 percent.
Manulife Financial (MFC.TO) was also a major drag on the index, down by 4.7 percent at C$22.26, helping to push the overall financial sector down by 2.1 percent.
“It’s just the uncertainty that the (U.S.) government has decided to pursue one policy for a period of the time and changes their opinion on the wisdom of that policy and does an about face and decides to do something different,” said Peter Chandler, senior vice-president at Canaccord Capital in Waterloo, Ontario.
U.S. Treasury Secretary Henry Paulson said on Wednesday he plans to focus on buying stakes in financial institutions and shoring up consumer credit markets, and is scrapping plans to buy up mortgages. [ID:nN12393760]
At 11:45 a.m., the S&P/TSX composite index .GSPTSE was down 106.42 points, or 1.19 percent, at 8,816.15, with seven of its 10 main groups lower. It had 100-point swings in both directions during the morning and fell 5.3 percent the day before.
“As we’ve seen of late any sort of rally has been pretty short-lived,” said Michael Sprung, president at Sprung & Co. Investment Counsel of the initial market strength.
“That’s really stemming from the wave of redemptions that are forcing mutual funds and hedge funds to get out of the market here no matter what the price to meet those redemptions. That’s one of the primary catalyst behind it in addition to the fears of quite a severe recession as a possibility.”
Thursday’s see-saw activity is a sign of “investor fatigue,” Sprung added.
“Everyone is shell-shocked at the moment and we’re bound to see periods here where people are stepping back and trying to assess what their next move might be.”
The benchmark index has tumbled about 40 percent from its June peak, the bulk of the slide occurring in September and October in what market watchers described as extreme volatility.
Thursday’s picture in resources was mixed with the energy sector down 1.2 percent, while materials edged 0.1 percent higher. Barrick Gold (ABX.TO) was up 2.5 percent at C$26.23, and Suncor Energy (SU.TO) fell 1.9 percent to C$22.93.
On the upside, Loblaw Companies Ltd (L.TO), a top net gainer, rose 10.8 percent to C$29.84 after Canada’s biggest supermarket chain reported higher quarterly profit helped by a boost in same-store sales, but warned that the slowing economy could spoil its performance for the remainder of the year. [ID:N13466147]
Canadian Pacific (CP.TO) fell 5 percent to C$43.44 after it said it expects to cut capital investment in 2009. [ID:nWNAB2941] ($1=$1.23 Canadian) (Reporting by Jennifer Kwan; Editing by Peter Galloway)