September 9, 2011 / 9:40 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
 * Top German to quit ECB over bond-buying conflict
 * Obama’s $447 billion jobs plan faces uphill battle
 * Domestic jobs data weaker than expected
 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 against 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 that may be 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 U.S. 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 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 Aug. 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 fell by almost 5 percent on worries about economic growth. [MET/L]
 Teck Resources TCKb.TO dropped 4.6 percent to C$40.58.
 Gold-mining stocks, which have helped cushion market losses in recent downturns, sank 0.4 percent, even though 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 that 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 said. “It underscores the fact that our economy remains quite susceptible, quite vulnerable to global concerns.”
 Group of Seven finance ministers met in France on Friday to discuss measures to tackle Europe’s debt crisis and revive economic growth.
 “It’s a tall order that people can be satisfied,” McHugh said of the task facing the G7 meetings. “We are probably going to have some more down days next week.”
 In company news, Bank of Nova Scotia (BNS.TO) said on Friday it will buy a near 20 percent stake in China’s Bank of Guangzhou for about C$719 million to expand its footprint in China. Its shares fell with the broader financial sector, down 2.2 percent at C$51.63. [nL3E7K90L4]
 Shares of Lululemon Athletica Inc LLL.TO dropped 3.7 percent to C$54.94, after the yogawear retailer said sales gains at established stores would slow in the current quarter. [nN1E788050]
($1=$1.00 Canadian)  (Editing by Jeffrey Hodgson; editing by Peter Galloway)                 

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