* TSX down 1.09 percent at 12,146.74
* Heavily weighted banks and energy groups fall
* S&P cuts Greek debt to junk, downgrades Portugal (Adds details, updates closing numbers)
By Cameron French
TORONTO, April 27 (Reuters) - Toronto’s main stock index fell from a 19-month high on Tuesday as investors bailed out of stocks across all industry groups after credit ratings for Greece and Portugal were slashed.
Heavily weighted financial shares slid 1.46 percent, while energy issues dropped 1.83 percent as the downgrades sparked a flight-to-safety U.S. dollar rally that pressured commodity prices.
Bank stocks were led downward by Canadian Imperial Bank of Commerce (CM.TO), which fell 2 percent to C$75.43, while Manulife Financial (MFC.TO) retreated 1.8 percent to C$18.94. Energy issues were pulled down by Nexen Inc NXY.TO, which fell 4.1 percent to C$25.42.
Ratings agency Standard & Poor’s downgraded Greek ratings to junk status on concerns about its ability to implement the reforms needed to address its high debt burden. [ID:nLDE63P0LU]
It also cut the rating on Portugal by two notches to A-minus, four levels above speculative, because of concerns about the country’s ability to deal with high debt levels.
“It has sent a clear reminder to the markets about the extent of the problems in the euro region,” said Elvis Picardo, a strategist at Global Securities in Vancouver.
“The major fear at this point is if Greece or Portugal or anyone else defaults on their debt. That will really cause a firestorm in the market.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended the session down 134.23 points, or 1.09 percent, at 12,146.74. Early in the session, the index hit a 19-month high at 12,321.76.
Steve Ibel, institutional equities trader at Beacon Securities, in Halifax, Nova Scotia, said the decline from the highs was not entirely unexpected, noting the index had risen for six straight days coming into the session.
The one area of strength was in gold-mining stocks, as worried investors sought a safe haven in the metal.
However, with base metals stocks hurt by the drop in industrial metals prices, the TSX index’s materials sector ended the session down slightly.
Teck Resources TCKb.TO, which mines copper, zinc, and coal, retreated 5 percent to C$41.05.
Picardo said the recent strength of the market, combined with the relatively moderate drop on Tuesday, suggest investors are not panicking.
“You might see some buyers attracted at these levels,” he said.
Industrial stocks fell 1.83 percent as Canadian National Railway CNR.TO fell 2.4 percent to C$62.21 despite reporting a quarterly profit that beat analysts’ estimates late on Monday.
$1=$1.01 Canadian Reporting by Cameron French, additional reporting by Ka Yan Ng; editing by Peter Galloway