(Updates to afternoon)
TORONTO, March 17 (Reuters) - The Toronto Stock Exchange’s main index dove on Monday in its biggest one-day drop in nearly two months, as the impact of the global credit crisis deepened.
Sharp declines by resource issues worsened the selloff on Bay Street, driving the TSX far lower than its U.S. counterpart, as oil prices retreated and investors worried about the impact of the stumbling U.S. economy on the demand.
The heavyweight energy and financial sectors were down 3.4 percent and 2.4 percent respectively. Suncor Energy (SU.TO) slid C$3.43, or 3.3 percent, to C$100.70, while Toronto-Dominion Bank (TD.TO) dropped C$1.62, or 2.6 percent, to C$59.67.
“It seemed to me surprising that we’ve seen for the last few weeks worries about a global slowdown and yet record highs in commodity prices,” said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Missouri.
“That disconnect now is being eliminated. Unfortunately, it’s being eliminated on the side where investors are coming to believe more seriously that the U.S. economy is slowing and, with the credit crunch having lasted and gotten worse than what was expected, that those have negative implications for U.S. growth and probably the rest of the world.”
The S&P/TSX composite index .GSPTSE was down 355.95 points, or 2.69 percent, at 12,896.89 by Monday afternoon, with all but one of its 10 main sectors in negative territory. The index was briefly down more than 400 points, the biggest intraday decline since mid-January.
Banking shares were shaken as worries over the health of U.S. financial markets intensified after the purchase of Bear Stearns BSC.N by JP Morgan Chase (JPM.N) for the fire sale price of $2 a share, far below its closing price of $30.85 on Friday.
As well, the U.S. Federal Reserve made an emergency 25 basis point cut to its discount rate on Sunday and widened its lending range of big financial firms.
In Toronto, shares of all the major banks slumped, including Canadian Imperial Bank of Commerce (CM.TO), which was also stung by a large quarterly loss posted by one of the U.S. monoline bond insurers it is exposed to. CIBC fell C$3.19, or 5.3 percent, to C$56.71.
The materials sector added to the losses, giving up 2.6 percent, with Potash Corp of Saskatchewan (POT.TO) down C$5.36, or 3.4 percent, at C$152.78. The subindex of gold producers gave up earlier gains, retreating 1.5 percent, with Inmet Mining IMN.TO off C$5.39, or 6.3 percent, at C$80.15.
The small healthcare sector was the lone group in the positive, gaining 8.2 percent, as QLT Inc QLT.TO surged C$1.02, or 44 percent, to C$3.34 after it said it will continue with plans to divest its topical acne treatment after the U.S. Food and Drug Administration lifted key blood monitoring requirements.
Cardiome Pharma COM.TO also helped pull the sector higher after it released positive interim clinical results for its oral heart drug and said it is looking at possible partnerships and other strategic alternatives. Cardiome jumped C$2.10, or 33.6 percent, to C$8.35.
$1=$1.00 Canadian Reporting by Leah Schnurr; editing by Rob Wilson