October 27, 2008 / 8:58 PM / 9 years ago

CANADA STOCKS-Prices plunge as commodity fears grip market

*TSX closes below 9,000 for first time since Dec. 2004

*Energy sector falls 9.2 percent as oil falls below $64

*Materials sector tumbles 11 percent

(Adds official closing numbers, quote, details)

TORONTO, Oct 27 (Reuters) - The Toronto Stock Exchange’s main index tumbled on Monday to close below 9,000 for the first time since December 2004 as worries intensified that the faltering global economy will further erode markets for Canadian-produced commodities such as oil and metals.

The S&P/TSX composite index .GSPTSE lost more than 300 points in the last half hour of trade, and closed down 756.75 points, or 8.14 percent, at 8,537.34, with all of its 10 main groups lower.

Toronto’s fall was far steeper than that of U.S. stocks due to its heavy weighting in commodity-related issues, said Andrew Pyle, investment adviser at ScotiaMcLeod in Peterborough, Ontario.

“The continued pressure on the commodity prices remains a theme and that’s really coming from this realization that the global contagion of weaker economic growth in North America is becoming more pervasive,” Pyle said. “In other words, it’s hitting more countries.”

“At the end of the day, you stack up the TSX to the S&P and we still have much greater weighting and sensitivity to commodity prices.”

The energy sector fell 9.2 percent as oil prices settled at an 18-month low at $63.22 a barrel on worries over weakening demand. [ID:nSYD351781] Canadian Natural Resources Ltd CNQ.TO was down 10.5 percent at C$46.55.

The materials sector, home to mining and fertilizer companies, fell 11 percent with Agnico-Eagle Mines Ltd AEM.TO dropping 18.8 percent to C$27.50.

“The market reflects what it thinks of the future and at this point it’s looking for more demand erosion ... going forward,” said Lex Kerkovius, senior research analyst at McLean & Partners Wealth Management Ltd., in Calgary.

“They’re probably still trying to bake that into the stock prices notwithstanding what the commodities are doing on a very short term basis, like from day-to-day basis. From the longer term perspective, I think the market is still nervous about the commodity stocks right now.”

Toronto’s plunge followed big drops on equity markets in Asia and Europe on Monday on fears that further coordinated action to calm markets may not be enough to fend off a global recession. ($1=$1.29 Canadian) (Reporting by Jennifer Kwan; Editing by Peter Galloway)

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