December 17, 2007 / 2:12 PM / 11 years ago

Stocks plunge on weak resources, US fears

TORONTO (Reuters) - The Toronto Stock Exchange’s main index closed broadly lower on Monday due to a sharp selloff of resource issues and persistent worries over the health of the U.S. economy.

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. Toronto stocks were more than 100 points lower on Monday morning due to weaker commodity prices and worries about the global economic outlook. REUTERS/Mark Blinch

The resource-heavy materials sector led the fall, shedding 3.8 percent. The group was pulled lower by gold miners, despite a bounce in the price of the commodity.

Barrick Gold (ABX.TO) fell 89 Canadian cents, or 2.3 percent, to C$37.67, and Centerra Gold (CG.TO) was down 47 Canadian cents, or 4.1 percent, at C$10.98. The gold-mining subsector as a whole lost 4.5 percent.

The energy group declined along with the price of oil, which was hurt by the prospect that OPEC could decide to raise output when it meets in February.

Suncor Energy (SU.TO) retreated C$2.52, or 2.4 percent, to C$102.82, while the sector lost 1.9 percent.

On the upside, Husky Energy Inc (HSE.TO) gained 44 Canadian cents, or 1 percent, to C$43.53 after the company said it had finalized terms with Newfoundland to allow Husky to expand its White Rose offshore oil field.

Growing fears of inflation in the United States also weighed on the Canadian stock index and dampened investor expectations for further interest rate cuts.

The S&P/TSX composite index .GSPTSE closed down 287.12 points, or 2.1 percent, at 13,387.11 with all of its 10 main groups in negative territory.

It was the third session in a row that the index has ended lower and the biggest one-day drop since the end of October.

Government reports in the U.S. last week showed rising price pressures for last month and analysts said this could prevent the U.S. Federal Reserve from cutting interest rates.

“November inflation numbers were very bad, and that speaks to ‘Oh dear, maybe we won’t get a rate cut’,” said John Kinsey, portfolio manager at Caldwell Securities Ltd.

“But I think the real focus should be on the economy, not on inflation,” Kinsey added. “A lot of people are calling for a recession next year.”

Heavyweight financial shares gave up 1.3 percent, rattled by the gloomy economic sentiment. Bank of Montreal (BMO.TO) slid C$1.74, or 3 percent, to C$56.37, and Toronto-Dominion Bank (TD.TO) fell C$1.88, or 2.6 percent, to C$70.62.

The tech sector slid 3 percent, dragged down by BlackBerry maker Research In Motion RIM.TO, which fell C$6.74, or 6.3 percent, to C$101.02.

In other equities news, Quebecor World Inc IQW.TO fell after the company’s chief executive resigned amid concerns over the commercial printer’s financial liquidity.

Quebecor World ended down 17 Canadian cents, or 9.8 percent, at C$1.57.

Market volume was 423 million shares worth C$7.3 billion. Decliners outpaced advancers 1,293 to 385. The blue chip S&P/TSX 60 index .TSE60 closed down 15.26, or 1.9 percent, at 782.47.

In New York, stocks stumbled on worries that rising prices and a continuing housing slump raised the treat of stagflation.

The Dow Jones industrial average .DJI fell 172.65 points, or 1.29 percent, to 13,167.20, while the Nasdaq Composite Index .IXIC was down 61.28 points, or 2.32 percent, at 2,574.46.

$1=$1.01 Canadian

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