*Toronto stocks tumble 3 percent, enter bear territory
*U.S. financials, Nortel, continue to weigh
*Gold soars as investors seek safe haven
(Adds comments, details, official closing data)
By Natasha Elkington
TORONTO, Sept 17 (Reuters) - The Toronto Stock Exchange’s main index tumbled almost 3 percent into bear-market territory on Wednesday amid worries over the U.S. financial crisis and as Nortel Networks Corp NT.TO slashed revenue forecasts and said it was looking to sell one of its businesses.
The heavily-weighted financial sector continued to slide because of persisting concerns over troubled U.S. insurer American International Group (AIG.N).
The financial services sector sank 5.1 percent, with Manulife Financial (MFC.TO) down 6.2 percent at C$33.76. Manulife fell after it said it will have unstipulated costs tied to AIG and to failed investment bank Lehman Brothers LEH.N. Insurer Sun Life Financial (SLF.TO) fell 8.1 percent to C$35.77, hitting a new year low, after disclosing its securities holdings in AIG and AIG subsidiaries.
“Manulife and Sun (Life) have spelled out pretty much what their exposure is, but none of the Canadian banks have commented and they, of course, are being hit the hardest,” said John Kinsey, portfolio manager at Caldwell Securities Ltd.
Nortel Networks dropped a whopping 51.8 percent to C$2.76 after it cut its revenue forecasts, prepared for a new wave of layoffs and said it was looking at selling one of its businesses.
A 2.1 percent rise in the resource-heavy materials group cushioned the index’s drop a bit as the price of gold posted its biggest one-day gain in dollar terms.
“Gold is the star of the day, it has just gone wild here,” Kinsey said.
Shares of Potash Corp of Saskatchewan POT.TO were down 2.3 percent at C$170.76 on concerns that fertilizer prices face more risk from a slowing world economy.
The S&P/TSX composite index .GSPTSE officially closed down 349.30 points, or 2.86 percent, at 11,877.69. A bear market is often defined as one that is down 20 percent from its high point.
$1=$1.07 Canadian Reporting by Natasha Elkington; Editing by Peter Galloway