October 24, 2008 / 1:16 PM / 10 years ago

CANADA STOCKS-Toronto index expected to tumble at open

TORONTO, Oct 24 (Reuters) - The Toronto Stock Exchange’s main index .GSPTSE is poised to tumble on Friday as part of a wave of sharp drops on equity markets worldwide as recession fears gained momentum.

The resource-rich index will likely show steep declines at the open as commodity prices slid further.

Major stock markets around the world sank as panicked investors moved to the safety of government debt and the U.S. dollar and Japanese yen. [MKTS/GLOB] Britain’s top share index dropped 7 percent by midday in London, while Japan’s Nikkei average closed 9.6 percent lower.

U.S. stock index futures tumbled so sharply that they had to be frozen at several points, but the New York Stock Exchange and Nasdaq said trading would open as normal at 9:30 a.m. (1330 GMT) [ID:nN24505205]

“Canada should get hit a fair bit more because gold is down, oil is down, copper is down, every commodity is down again today quite aggressively so I think you are probably going to see a much worse effect in Canada than you would in the U.S.,” said Paul Harris, portfolio manager at Avenue Investment Management.

“I think people are coming to grips with the fact that you are going into a global recession and I think that it can be a consumer-led recession which I think is much worse than any other recession you’ll ever have.”

Energy issues will likely also get knocked down hard on the Toronto exchange as the price of oil continues to slide. An emergency OPEC meeting resulted in a swift agreement to cut production as a first step towards halting an oil price slide [ID:nLO735433] but has so far done little to stem the drop.

It was just above $63 a barrel, down more than 50 percent since it hit a record above $147 a barrel in the summer.

Investors are also braced for the materials sector to be hit as well as gold and copper dove on demand fears. [ID:nLO274767]

Teck Cominco TCKb.TO, which dropped nearly 17 percent on Thursday, [ID:nN23411992] may come under further pressure after Desjardins Securities and UBS cut their targets on the diversified miner. [RCH/CA]

As recession worries take center stage, profit outlooks are a primary focus as companies report quarterly earnings over the next several weeks.

In an market that has been unspooling for weeks because of an outlook for slower economic growth worldwide, losses are expected to be deep on Friday. But some saw a silver lining in what may come.

“I would say tsunami is the best word for it,” said Michael Sprung, president at Sprung and Co Investment Counsel.

“It would appear there is just a wave of selling coming and hopefully this is the final capitulation that everybody has been waiting for,”

The Toronto index on Thursday made a late-day break higher to finish up 1 percent after a seesaw session that saw the TSX swing nearly 580 points from trough to peak.

$1=$1.27 Canadian Additional reporting by Scott Anderon and Frank Pingue; Editing by Frank McGurty

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