September 26, 2008 / 3:31 PM / 10 years ago

UPDATE 2-Toronto stocks plunge as RIM, U.S. woes bite hard

*Research In Motion falls 25 percent on softer forecast

*Financials sink on stalled U.S. bailout, WaMu failure

*Energy stocks fall as oil slides on rescue plan doubts

(Adds details)

TORONTO, Sept 26 (Reuters) - The Toronto Stock Exchange’s main index tumbled on Friday morning after sentiment soured further on delays in getting a deal on a U.S. financial bailout plan and as technology bellwether Research In Motion Ltd RIM.TO issued a softer forecast.

Shortly after 11 a.m. (1500 GMT), the technology sector was down 6.8 percent with Research In Motion RIM.TORIMM.O dropping 24.6 percent to C$76.20, accounting for more than 100 points of the index’s 400-point drop.

After the market close on Thursday, RIM warned profit in the current quarter would come in lower than analysts had foreseen due to higher costs related to its newest BlackBerry smartphones. [ID:nN25530058]

A cloud of uncertainty swirled over the U.S. financial bailout plan as pressure mounted for a deal to be made after talks broke down in acrimony.[ID:nLQ606777] For links to more stories, see [ID:nN22402709]

Adding to the mix, U.S. authorities shut bank Washington Mutual Inc (WM.N) and sold its assets to JPMorgan Chase & Co (JPM.N), roiling global markets.

“The longer you drag you feet in there debating it the worse it gets for the market,” said Joe Ismail, technical analyst at Maison Placements Canada.

As well, new U.S. economic data showed growth was not as strong as previously thought in the second quarter as consumer spending rose less than foreseen, and businesses cut back on investments, which further depressed the growth picture south of the border. [ID:nN26283994]

The S&P/TSX composite index .GSPTSE was down 403.98 points, or 3.22 percent, at 12,142.57, with all but one of its 10 main groups lower. The small health care group was up 0.4 percent.

The heavily-weighted financial services sector slumped 2.1 percent with Sun Life Financial Inc (SLF.TO) down 4.7 percent at C$37.63 after the insurer said it expects to record a charge related to its exposure to Washington Mutual in the third quarter. [ID:nN26276538]

Royal Bank of Canada (RY.TO) slipped 2.5 percent to C$50.19. Canada’s biggest bank said it saw chances for strategic deals in the U.S. wealth management or consumer banking sector, but does not expect to seal a large-scale deal. [ID:N26285885]

The heavily-weighted materials and energy groups, which combined account for about half of the index’s weigh, slumped 4 percent and 2.1 percent, respectively, as commodity prices dropped.

In addition to RIM, Heavyweight Potash Corp of Saskatchewan POT.TO slipped 5.5 percent to C$154.28, while Agrium AGU.TO sank 11 percent to C$68.94 after their share-price targets were cut by an analyst. [ID:nN26289586]

“When those three stocks begin to sell off they literally decimate the index,” Ismail said.

Teranet Income Fund TF_u.TO rose 0.3 percent to C$11.01 after it recommended that its unitholders reject Borealis Infrastructure Management Inc’s C$11 a unit hostile takeover bid, calling the offer “inadequate.” [ID:N26291771] ($1=$1.04 Canadian) (Reporting by Jennifer Kwan; Editing by Peter Galloway)

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