February 29, 2008 / 2:12 PM / 11 years ago

Toronto stocks take a tumble on economic fears

TORONTO (Reuters) - The Toronto Stock Exchange’s main index had its biggest decline in more than three weeks on Friday, hit by jitters over the health of the U.S. economy, and with resource and banking shares falling sharply.

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch

The benchmark took its cue from U.S. stock markets, which were pressured by economic worries as a survey showed U.S. consumer sentiment fell to a 16-year low.

The energy and resources sectors, which combined account for more than 40 percent of the Toronto index, shed 2.2 percent and 2.1 percent respectively. Canadian Natural Resources (CNQ.TO) was down C$1.44, or 1.9 percent, at C$73.76, while Inmet Mining IMN.TO gave up C$4.00, or 4.5 percent, to C$85.24.

A 2.1-percent decline in the financial group also helped pull the index lower, with Bank of Montreal (BMO.TO) sliding C$2.65, or 5.1 percent, to C$49.70. BMO said it is still in talks to fix two troubled asset-backed commercial paper trusts but that failed to reassure investors who are worried it will face further writedowns.

Royal Bank of Canada (RY.TO) was off 73 Canadian cents, or 1.5 percent, to C$49.39 after it reported its profit in the first quarter fell 17 percent, hurt by, among other things, writedowns on U.S. securities.

“It’s a fairly significant selloff, because, basically the same thing is taking place in New York and we followed that leap,” said Fred Ketchen, director of equity trading at ScotiaMcLeod.

The S&P/TSX composite index .GSPTSE closed down 291.20 points, or 2.1 percent, at 13,582.69 with all 10 of its main groups negative. The drop erased all the gains made this week, leaving it down 0.02 percent on the week.

But it was up 3.3 percent for the month, as rising commodity prices helped it come back from January’s hefty losses. Before Friday’s session, the index had climbed 5 percent over two weeks.

“It looked like the market was trying to put together a sustained rally but clearly we’re at the mercy of day-to-day, moment-to-moment economic and financial information,” said Irwin Michael, portfolio manager at ABC Funds. “Clearly there’s still concern about subprime and asset-backed commercial paper.”

On Friday, worries of a possible recession in the United States were once again on investors minds. A Reuters/University of Michigan Survey of consumers showed sentiment sagged to a 16-year low in February.

“Sixteen years is a long time and that means there’s been a significant change over the period here in that consumer sentiment index,” Ketchen said. “And if people aren’t confident, they’re not going to get excited about running out to buy stocks.”

As well, separate data from the National Association of Purchasing Managers-Chicago showed U.S. Midwest business activity contracted sharply this month.

Research In Motion RIM.TO was one of the biggest drags on the Toronto index, losing C$3.99, or 3.8 percent, to C$102.53. The tech sector was down 2.7 percent, while the consumer discretionary group also trimmed 2.7 percent.

On the upside, Laurentian Bank of Canada (LB.TO) bucked the downward momentum, adding C$1.25, or 3.2 percent, to C$40.18, while Methanex Corp (MX.TO) was able to gain 82 Canadian cents, or 3 percent, to C$28.45.

Market volume was 417 million shares worth C$7.5 billion. Decliners outpaced advancers 1,093 to 535. The blue chip S&P/TSX 60 index .TSE60 closed down 18.79 points, or 2.3 percent, at 795.23.

On Wall Street, the Dow Jones industrial average .DJI skidded 315.79 points, or 2.51 percent, to 12,266.39, and the Nasdaq Composite Index .IXIC was down 60.09 points, or 2.58 percent, at 2,271.48.

($1=$0.98 Canadian)

Editing by Peter Galloway

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below