August 17, 2009 / 9:00 PM / 10 years ago

CANADA STOCKS-TSX battered by worries over economic recovery

* TSX down 316.42 points, or 2.92 percent, at 10,531.59

* Slide in commodity prices hits index

* Financials drop 2.6 percent on recovery worries (Adds details, quotes)

TORONTO, Aug 17 (Reuters) - Toronto’s main stock index fell broadly on Monday, touching its lowest level in just over two weeks, with commodity-linked issues sliding on weak oil and metal prices, while worries over the pace of economic recovery rattled bank shares.

Energy, financial, and materials issues led the broad decline as commodity prices bore the brunt of recovery doubts, and worries about the health of the U.S. consumer were underpinned by below-par results from U.S. home improvement retailer Lowe’s Cos Inc (LOW.N).

As well, earlier data showed Japan’s economy emerged from its longest recession in at least 60 years in the second quarter, but analysts warned the recovery may be shaky. [ID:nT212505]

“We are down right out of the gate,” said Paul Gardner, partner and portfolio manager at Avenue Investment Management.

“This clearly has a lot to do with the fact that a bit of the euphoria is over with.”

The Toronto Stock Exchange S&P/TSX composite index .GSPTSE tumbled 316.42 points, or 2.92 percent, to 10,531.59, with all of its 10 main groups lower. Earlier in the day, the index touched its lowest level since July 30.

The blue chip S&P/TSX 60 index .TSE60 closed 19.05 points lower, or 2.92 percent, at 633.58.

The retreat reflected persistent investor concerns about global growth and demand for commodities, as oil prices CLc1 settled below $67 a barrel [ID:nSYD485910], while metal prices were also weaker. [ID:nN17567143]

Suncor Energy (SU.TO) sank 4 percent to C$34.41, while Potash Corp of Saskatchewan POT.TO tumbled 4.5 percent to C$100.71. Barrick Gold (ABX.TO) fell 3 percent to C$36.27, while Goldcorp (G.TO) dropped 3.4 percent to C$37.70.

Canada’s biggest bank, Royal Bank of Canada (RY.TO), fell 2.5 percent to C$50.10, while Toronto-Dominion Bank (TD.TO) sank 2.5 percent to C$62.20.

Last week, the Toronto index notched its first weekly loss in five weeks, due in part to U.S. retail and consumer confidence readings that beat down investor optimism, which had helped the TSX rise some 40 percent from its March lows.

Analysts said the market is also taking a breather after racing up that much, and there could be room for a further drop in the short term.

“The market had clearly gotten ahead of itself,” said Bruce Latimer, a trader at Dundee Securities.

“People are locking in some profits. We just might see a couple more days of this consolidation,” he added.

$1=$1.11 Canadian Reporting by Jennifer Kwan; editing by Rob Wilson

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