January 23, 2008 / 6:57 PM / 11 years ago

UPDATE 3-Toronto stocks drop sharply on recession fears

(Updates numbers, adds details)

TORONTO, Jan 23 (Reuters) - The Toronto Stock Exchange’s main index extended its fall on Wednesday afternoon, sliding by as much as 400 points on fears of a U.S. recession and weakening commodity prices.

At midafternoon, the benchmark index had trimmed some of its earlier losses but still had erased much of the 500-point recovery it staged on Tuesday, buoyed by interest rate cuts in Canada and the United States.

Heavy selloffs in the materials and energy sectors yanked the index back down on Wednesday, with those groups giving up 5.9 percent and 4.3 percent respectively.

The S&P/TSX composite index .GSPTSE was down 344.87 points, or 2.73 percent, at 12,296.01 with eight of its 10 main groups in the negative.

Potash Corp of Saskatchewan POT.TO was the biggest net loser, shedding C$15.47, or 12.2 percent, to C$111.41, followed by Fairfax Financial Holdings (FFH.TO), which was down C$7.70, or 2.6 percent, at C$288.70.

The energy group dropped as oil prices slumped on worries of a global economic slowdown. Petro-Canada PCA.TO was off C$2.20, or 4.5 percent, at C$44.70.

The energy and materials sectors have been bruised by concerns that demand for resources could be dampened by a slowdown in growth.

BlackBerry-maker Research In Motion RIM.TO tumbled C$7.58, or 8.1 percent, to C$85.70, helping the tech sector down 2.7 percent.

Recession fears were deepened by disappointing profit forecasts from Apple Inc (AAPL.O) and Motorola MOT.N.

Tuesday’s advance came after a massive five-session fall, that carved more than 1,500 points off the index.

In New York, stocks were also down on Wednesday afternoon, with the Dow Jones industrial average .DJI down 185.50 points, or 1.55 percent, to 11,785.69, and the Nasdaq Composite Index .IXIC off 68.24 points, or 2.98 percent, to 2,224.03.

$1=$1.03 Canadian Reporting by Leah Schnurr; Editing by Peter Galloway

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