January 15, 2010 / 10:28 PM / in 8 years

CANADA STOCKS-Banks, resources combine to pull TSX lower

* TSX falls 1.01 pct to 11,685.37; down 2.3 pct for week

* Miners, banks, oils all march lower

* Corporate results key focus (Adds details)

By Ka Yan Ng

TORONTO, Jan 15 (Reuters) - Toronto’s main stock index took a broad hit on Friday, falling more than 1 percent as weakness in the energy, materials and banking groups combined to wipe out the last vestiges of the gains the index made as the new year dawned.

Commodity prices fell and bank shares were hit by concerns over a bank fee proposed by U.S. President Barack Obama, as well as by disappointing results from JPMorgan Chase & Co (JPM.N). [ID:nN13152862]

The proposed fee would see U.S. banks pay up to $117 billion to reimburse taxpayers for the government’s financial bailout of the sector. [ID:nN13152862]

“There’s discussion out there whether some Canadian banks might fall under this new bank tax in the United States,” said Gareth Watson, an equity advisor at ScotiaMcLeod.

Also, deep fourth-quarter loan losses reported by JPMorgan raised concerns about earnings for the broader U.S. bank sector. [ID:nN15183524]

“The fundamental problem is that the markets appeared priced for perfection. Anything that hints of cautiousness or weakness is not going to be taken lightly,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

Royal Bank of Canada (RY.TO) lost 1.7 percent to C$54.81 to lead all heavyweight decliners, while Toronto-Dominion Bank (TD.TO) wasn’t far behind with a 1.54 percent decline to C$63.35.

Corporate results over the next several weeks will likely drive the direction of equity markets. On Friday, JP Morgan’s results, along with falling commodity prices, overshadowed better-than-expected numbers from chipmaker Intel.

“Investors chose to focus on JP Morgan’s numbers. Their somewhat cautious outlook put a dampener on investors’ optimism, and we have commodity prices under pressure yet again. These factors combined to take a pretty big toll on the index today,” Picardo said.

The price of oil fell for a fifth straight day on Friday, settling at $78 a barrel, while gold prices also dropped. [O/R] [GOL/]

Other heavyweight names on the downside included Kinross Gold (K.TO), which dropped 4.77 percent to C$19.75, while Suncor Energy (SU.TO) dropped 2.1 percent to C$36.71.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 119.01 points, or 1.01 percent, at 11,685.37. All 10 of the index’s main sectors fell, with the mining-heavy materials group leading the way.

All the gains made in the first sessions of the new year, which included a brief rally above 12,000 this week, had been erased by the end of trade on Friday. The index ended 2009 at 11,746.11.

It dropped 2.3 percent on the week.

$1=$1.03 Canadian Reporting by Ka Yan Ng; editing by Peter Galloway

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