July 15, 2008 / 1:02 PM / 11 years ago

Toronto stocks slammed by oil slide, economic woes

TORONTO (Reuters) - The Toronto Stock Exchange’s main index plunged more than 380 points on Tuesday as resource issues were hit by weak oil prices, while worries over the global economy battered the wider market.

After logging a hefty intraday drop of more than 3 percent, the benchmark briefly halved its losses in the late afternoon, before retreating again to close at its lowest level in nearly two weeks.

The price of oil sank more than $6 to $138.74 a barrel as growing anxiety about the U.S. economy’s health raised questions about world economic growth and demand for crude.

The sharp fall hit Bay Street’s heavyweight energy sector, which lost 4.2 percent, with Canadian Natural Resources (CNQ.TO) down C$5.29, or 5.5 percent, at C$91.55.

Worries about demand for commodities also hurt the resource-heavy TSX’s miners and fertilizer companies, which were all among the biggest laggards by weight.

The S&P/TSX composite index .GSPTSE closed down 383.73 points, or 2.79 percent, at 13,357.56 with all but one of its 10 main sectors in a downturn. The index fell as far as 13,256.16, or 3.5 percent, in the morning.

The outlook for the economy was in the forefront, after the Bank of Canada ratcheted up talk on inflation, saying that inflation could spike above 4 percent for the first time since 2003 next year, while it held interest rates steady at 3 percent.

Meanwhile, U.S. Federal Reserve Chairman Ben Bernanke said that financial markets were weighed down by the housing slump, and that the outlook for economic growth and inflation was unusually uncertain.

Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri, said that the central bank messages were consistent with each other.

“In both cases, what they were saying was we’re worried about how weak growth is, but we’re also worried about the implications for inflation and how much inflation will pick up, at least in the short term,” Warne said.

The materials sector gave up 3.1 percent, with Potash Corp of Saskatchewan POT.TO down C$4.99, or 2.2 percent, at C$225.01. Agnico-Eagle Mines (AEM.TO) lost C$2.97, or 3.8 percent, to C$75.82.

In the oil patch, Imperial Oil (IMO.TO) was down C$2.35, or 4.4 percent, at C$50.93, and Suncor Energy (SU.TO) fell C$3.70, or 6 percent, to C$57.92.

Banking shares fell 2.3 percent as worries about more fallout from the U.S. financial crisis continued to rattle the sector. Toronto-Dominion Bank (TD.TO) was down C$2.23, or 4 percent, at C$53.51, while Bank of Montreal (BMO.TO) slipped 82 Canadian cents, or 2.1 percent, to C$39.27.

($1=$1.00 Canadian)

Reporting by Leah Schnurr; editing by Rob Wilson

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