* Index hits lowest level since December 2003
* TD announces credit trading losses, stock down
* Losses accelerated by sliding oil
* Teck drops 32 percent on cost cut plans
By Ka Yan Ng
TORONTO, Nov 20 (Reuters) - The Toronto Stock Exchange’s main index fell more than 4 percent on Thursday as the financials group was weighed down by an earnings warning from Toronto-Dominion Bank (TD.TO) and the price of oil slid to a 42-month low.
The index’s financials group dropped 7 percent, extending the previous session’s slide as TD became the second bank this week, after Bank of Nova Scotia on Tuesday, to announce credit trading losses. [ID:N20398511]
TD, Canada’s second-largest bank, said that C$350 million in after-tax credit trading losses will eat into fourth-quarter earnings. Its shares lost 7.3 percent to C$46.27.
All other major banks saw steep losses as worries mounted that similar news will emerge from TD’s peers. CIBC (CM.TO) led all banks lower, down 9.3 percent at C$43.80. Heavyweight insurer Manulife Financial (MFC.TO) also fell, down 12 percent at C$18.47.
Shortly after 11:50 a.m. (1650 GMT), the S&P/TSX composite index .GSPTSE was down 394.22 points, or 4.64 percent, at 8,096.34, clawing back after dropping below the psychologically important 8,000 mark earlier in the day, when it hit its lowest level since December 2003.
All 10 of the index’s main sectors were in the red.
“TD is part of it. Also there’s a sense of panic when you see another central bank that eases 100 basis points when it’s not expected,” said Francis Campeau, a broker at MF Global Canada, in Montreal, referring to the Swiss National Bank’s rate cut on Thursday. [ID:nLK597124]
“There is no reason to cheer about anything right now. The technicals are ugly as well.”
The energy sector was down 7.4 percent as oil fell briefly below $50 a barrel, deepening losses from the previous four sessions as battered financial markets reflected crumbling confidence in the world economy and evidence mounted of falling fuel demand. [ID:nSP424057]
Energy issues Canadian Natural Resources (CNQ.TO) and EnCana (ECA.TO) were down 13.6 percent and 6 percent, respectively. News that Alberta had softened its shift to higher oil and gas royalties was outweighed by the slide in oil prices.
Alberta, with its top industry facing skidding oil prices amid the global credit crisis, said it will offer companies lower royalties for new oil and gas wells over the next five years. [ID:nN19363515]
The materials sector was mixed but gold issues provided support to offset some losses in the sector. Fertilizer producer Potash Corp POT.TO fell more than 7 percent to C$75.30 and competitor Agrium AGU.TO fell 9 percent to C$32.82, as both companies said they are eyeing acquisitions as prices for target companies fall. [ID:nN20403351] Meanwhile, Goldcorp (G.TO) gained 2 percent to C$23.83 and Agnico-Eagle (AEM.TO) rose 5.7 percent to C$34.98.
Teck Cominco TCKb.TO sank 18 percent to C$4.26, reducing early losses, as the diversified miner announced a sweeping debt reduction plan, which includes suspending its dividend and asset sales. [ID:nN20391523]
U.S. economic data has not provided relief, further deepening investor gloom. The number of U.S. workers filing new claims for jobless benefits hit the highest level in 16 years in the recent week and a regional manufacturing gauge slumped. [ID:nN20514012]
In contrast, the partial reversal of a sharp slide in auto sales pulled up Canadian wholesale trade unexpectedly in September by 1.5 percent, Statistics Canada said, adding to upbeat data on third-quarter economic growth. [ID:nN20480398]
$1=$1.29 Canadian Reporting by Ka Yan Ng; Editing by Peter Galloway