April 20, 2009 / 9:19 PM / 9 years ago

CANADA STOCKS-TSX tumbles on weak oils, U.S. bank fears

* TSX tumbles 3.3 percent to 9,126.15

* New U.S. bank worries spook financials

* Oil gives up more than 8 percent

* Materials group the lone gainer (Adds details)

By Wojtek Dabrowski

TORONTO, April 20 (Reuters) - Toronto’s main stock index tumbled more than 3 percent on Monday as investors fled the market amid a sharp drop in the price of oil and new concerns over the vitality of U.S. banks.

Nine of the TSX’s 10 sectors fell, including the heavily weighted energy and financials groups, which dropped 6.5 percent and 5.1 percent, respectively.

The resource-rich materials group was the sole winner, adding 2.7 percent on the day as investors sought out gold, which is considered a defensive investment.

The S&P/TSX composite index .GSPTSE fell 311.50 points, or 3.3 percent, to close at 9,126.15.

Bruce Latimer, a trader at Dundee Securities, said it should be remembered that the day’s drop, albeit sharp, comes after six straight weeks of gains for Toronto’s benchmark index. The composite index has a year low of 7,479.96 set in early March.

“Most people I talk to are still in a fairly positive frame of mind,” he said, adding that before Monday, “the market has had a good bounce off its bottom without any significant pullback.”

However, new concerns began to swirl around the health of the U.S. banking sector and the economy on Monday after Bank of America Corp (BAC.N) reported a surge in troubled loans, which overshadowed its better than expected earnings [ID:nN20380236].

Bank of America shares plunged, taking with them much of the financial services sector both in Canada and the United States.

Canadian Imperial Bank of Commerce (CM.TO) fell 6.3 percent to finish at C$50.52. Toronto-Dominion Bank (TD.TO) fell 5.4 percent to C$47. National Bank of Canada (NA.TO) tumbled 5.8 percent to C$43.75.

Energy issues also retreated, as the renewed economic worries helped drag crude prices down by more than 8 percent [ID:nN20413985]. EnCana (ECA.TO) gave up 5.1 percent to C$52.58 and Suncor Energy (SU.TO) dropped 7.7 percent to C$28.90.

“It’s really a very ugly day,” said John Kinsey, portfolio manager at Caldwell Securities Ltd.

Investors appeared eager to buttress their defensive positions, however, driving up gold stocks such as Agnico-Eagle Mines (AEM.TO). The company was the day’s biggest net gainer, jumping 10.6 percent to finish at C$58.59.

Barrick Gold (ABX.TO) rose 8.4 percent to C$36.16. U.S. gold futures for June settled up 2.3 percent at $887.50. [ID:nLK615044]

Kinsey added that even though the last six weeks have been positive, there is much lost ground to still recover.

“We still believe it’s going to be a long, hard road,” he said.

Markets took a similar pounding in the United States as the Bank of America results reignited worries about the U.S. financial industry and the health of the economy.

The Dow Jones industrial average .DJI fell 3.6 percent to end at 7,841.73. The tech-heavy Nasdaq gave up 3.9 percent to finish at 1,608.21.

$1=$1.24 Canadian Reporting by Wojtek Dabrowski; editing by Rob Wilson

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