September 9, 2011 / 9:40 PM / 6 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
 "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
 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.
($1=$1.00 Canadian)
 (Editing by Jeffrey Hodgson; editing by Peter Galloway)

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