September 29, 2008 / 6:22 PM / 10 years ago

UPDATE 3-Toronto stocks plunge almost 7 percent on bailout vote

* Toronto stocks fall 6.7 pct as U.S. bailout vote starts

* Financials drop as bank jitters spread (Recasts with plunge in TSX; Adds details)

TORONTO, Sept 29 (Reuters) - The Toronto Stock Exchange’s main index tumbled almost 7 percent on Monday, the most since early 2001, as U.S. lawmakers began voting on a $700 billion bailout of the financial services sector.

While the U.S. House voted on the Wall Street rescue plan, concerns mounted that the fallout from the crisis in the United States was spreading rapidly around the globe.

“This is yet another Black Monday,” said John Ing, president at Maison Placements Canada.

The S&P/TSX composite index .GSPTSE fell 800.64 points, or 6.6 percent, to 11,325.36. In the span of about five minutes alone, 300 points were erased.

It marked the biggest intraday percentage drop since February 2001.

Later the TSX recovered some lost ground but plunged anew after lawmakers in Washington rejected the rescue package. For links to more stories, see [ID:nN22402709].

Markets were also on tenterhooks as European authorities set up several bank rescue operations on Monday, including a plan to partly nationalize Fortis NV FOR.BR [ID:nLS357697]. In the United States, Citigroup Inc (C.N), the largest U.S. bank, moved to acquire the bulk of Wachovia Corp WB.N [ID:nLT436737].

As part of co-ordinated action by the world’s major central banks, the Bank of Canada increased the amount of its swap facility with the U.S. Federal Reserve on Monday to US$30 billion from US$10 billion. [ID:TOR003487]

“What’s driving the Canadian market today is fear that this economic slowdown is going to be more global and more pronounced than people were previously giving credit to,” said Michael Sprung, president of Sprung & Co. Investment Counsel.

“It’s fear in the form that the bailout package in the U.S. is going to be insufficient to stem a global slowdown and, possibly, a global recession.”

The heavily weighted energy and materials groups, which combined account for about half the index’s weight, slumped 9.7 percent and 6.1 percent, respectively, as oil plunged below $100 a barrel on a firmer U.S. dollar and on signs the credit crisis was spreading beyond the United States to Europe. [ID:nSYD370166]

“If we are heading toward a pronounced global slowdown then energy consumption is going to be dramatically reduced,” said Sprung.

Canadian Natural Resources (CNQ.TO), a top net loser, shed 14.5 percent to C$68.65.

In materials, heavyweight Potash Corp of Saskatchewan POT.TO tumbled 10.5 percent to C$136.13 and Agrium Inc AGU.TO fell 13.4 percent to C$57.06.

The financial services sector was down 3.6 percent with Manulife Financial (MFC.TO) falling 4.5 percent to C$36.10.

The insurer’s chief executive told analysts the firm is in “an excellent position” to weather the financial-market turmoil, compared with industry peers, because it has modest debt levels and a stable deposit base. [ID:nN29370501]

$1=$1.04 Canadian Reporting by Jennifer Kwan, Scott Anderson and Wojtek Dabrowski; editing by Frank McGurty

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