March 14, 2008 / 9:15 PM / 11 years ago

UPDATE 3-Toronto stocks slammed by more credit worries

(Adds details, quotes)

By Leah Schnurr

TORONTO, March 14 (Reuters) - The Toronto Stock Exchange’s main index skidded almost 200 points on Friday in a broad selloff as the banking sector was battered by fresh worries over credit market turmoil.

After starting the day higher, the TSX quickly followed U.S. markets into negative territory after investment bank Bear Stearns BSC.N said it had been forced to get emergency funds from the U.S. Federal Reserve and JPMorgan Chase due to a cash squeeze.

The development intensified concerns over problems in financial markets and the widening ripple effect of troubles in the U.S. mortgage market.

On Bay Street, the banking sector was battered down 2.9 percent, with all the major banks lower. Toronto-Dominion Bank (TD.TO) shed C$2.09, or 3.3 percent, to C$61.29, while Royal Bank of Canada (RY.TO) slid C$1.83, or 3.9 percent, to C$45.52.

“It’s not often that a major league firm of some note melts down like this, so obviously there’s a few more cards to fall,’ Paul Hand, managing director at RBC Capital Markets, said of Bear Stearns.

“It’s obviously pretty upsetting to the global framework ... It’s important that those things stay liquid and keep moving or else the whole system will seize up.”

The S&P/TSX composite index .GSPTSE closed down 190.66 points, or 1.42 percent, at 13,252.84 with all but one of its 10 main sectors lower.

The large energy sector weighed on the benchmark, falling 1.1 percent, as investors preferred to lock in profits, while the price of oil eased slightly after seven days of record highs. Suncor Energy (SU.TO) was down C$2.93, or 2.7 percent, at C$104.13 and Imperial Oil (IMO.TO) fell C$1.79, or 3.2 percent, at C$53.40.

The subindex of gold producers was the one bright spot, edging up 0.9 percent after spot gold pierced $1,000 an ounce. The gain helped pull the larger materials sector up 0.02 percent. Agnico-Eagle Mines (AEM.TO) added C$2.47, or 3.2 percent, to C$79.00 and Kinross Gold (K.TO) rose 43 Canadian cents, or 1.7 percent, to C$26.51.

BlackBerry maker Research In Motion RIM.TO was also among the biggest decliners, falling C$3.94, or 3.8 percent, to C$100.18. The tech sector was down 2.3 percent. Elsewhere, the industrials group dipped 1.9 percent.

The TSX was off a slight 0.2 percent for the week after a roller-coaster ride of triple-digit gains and declines.

The market has experienced sharp volatility in recent months amid worries over global credit markets. Investor jitters have been stoked by concerns that troubles in the U.S. housing market have infected other areas of the broader economy.

“At first it looked like it was some mortgage reset problems in the U.S., but it’s gone way beyond that and now you’re into billions and billions (of dollars),” said John Kinsey, portfolio manager at Caldwell Securities Ltd.

“It’s hard to quantify and nobody knows how deep this thing is going to cut.”

Market volume was 399 million shares worth C$8.3 billion. Decliners outpaced advancers 986 to 573. The blue chip S&P/TSX 60 index .TSE60 closed down 12.05 points, or 1.52 percent, at 778.76.

In New York, stocks also dived amid worries over the Bear Stearns bailout. The Dow Jones industrial average .DJI sagged 194.65 points, or 1.6 percent, to 11,951.09, and the Nasdaq composite index .IXIC gave up 51.12 points, or 2.26 percent, to 2,212.49.

$1=$0.99 Canadian Editing by Rob Wilson

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