September 9, 2011 / 9:10 PM / 7 years ago

CANADA STOCKS-TSX dives more than 2 pct on euro zone fears

 * TSX falls 296.42 points, or 2.34 percent, to 12,387.54
 * Energy, financials lead decline
 By Trish Nixon
 TORONTO, Sept 9  (Reuters) - Toronto’s main stock market index tumbled along with world stocks on Friday, falling more than 2 percent, as worries about Europe’s festering debt problems intensified.
 European Central Bank board member Juergen Stark resigned in protest of the bank’s bond-buying program, throwing into question policymakers’ ability to deal with Europe’s debt crisis, a problem that could engulf a world economy already teetering on the brink of recession. [MKTS/GLOB]
 “All eyes are on Europe,” said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.
 “We are still a few hundred points away from the August lows, but it’s quite likely we may test those lows in the very near term. It all hinges on how Europe and Greece fare over the next few weeks.”
 Doubts about President Barack Obama’s $447 billion stimulus proposal added to the negative sentiment, with investors unconvinced his administration has the tools to revive the flagging U.S. economy.
 “The downward momentum had already been established,” said Pat McHugh, senior portfolio manager at Manulife Asset Management. “And it’s a Friday,” he said, noting terrorism threats against New York and Washington ahead of the 10th anniversary of 9/11 attacks had prompted investors to sell equities ahead of the weekend.
 All 10 of the TSX’s main sectors were lower, with energy issues leading the decline, plummeting 3.5 percent on a sharp drop in oil prices. [O/R]
 Canadian Natural Resources (CNQ.TO) fell 4.4 percent to C$34.15, while Cenovus Energy (CVE.TO) dropped 6.4 percent to C$31.78 and Suncor Energy (SU.TO) was down 3.2 percent at C$29.45.
 Financial issues sank 2.4 percent. Royal Bank of Canada (RY.TO) was the heaviest drag on the index, falling 3 percent to C$47.47, followed by Toronto-Dominion Bank (TD.TO), down 2.7 percent at C$74.22.
 The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed the session down 296.42 points, or 2.34 percent, at 12,387.54, its weakest close since August 26.
 Base-metal miners were under pressure as copper prices dropped more than 3 percent to their lowest level in more than two weeks, while tin and nickel also fell by almost 5 percent on worries about economic growth. [MET/L]
 Teck Resources TCKb.TO fell 4.6 percent to C$40.58.
 Gold-mining stocks, which have helped cushion market losses in recent downturns, sank 0.4 percent, even as gold prices rebounded from early losses on safe-haven buying. [GOL/]
 Adding to the gloom was news that the Canadian economy lost 5,500 jobs in August and the jobless rate rose to 7.3 percent. The data was far worse than forecast and overshadowed other signs the economy was making a comeback after a bleak second quarter. [ID:nN1E7880PE]
 “The Canadian jobs numbers didn’t help sentiment,” Picardo added. “It underscores the fact that our economy remains quite susceptible, quite vulnerable to global concerns.”
 ($1=$1 Canadian)  (Editing by Jeffrey Hodgson)                 

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