March 30, 2009 / 2:26 PM / 10 years ago

CANADA STOCKS-TSX hit by auto industry woes, oil's drop

 * TSX down 2.9 percent at 8,565.57
 * Energy sector down 4.4 percent as oil stumbles  (Adds details, quotes)
 By Jennifer Kwan
 TORONTO, March 30 (Reuters) - Toronto’s main stock index fell hard on Monday morning as oil and base metals prices dropped and fresh troubles in the auto sector hit investor sentiment.
 The resource-heavy Toronto market followed world stocks lower on fears that General Motors Corp (GM.N) and Chrysler were edging closer to bankruptcy. [ID:nSP424474] after the U.S. government took a hard line in its dealings with them.
 Concerns about the banking sector in Europe also hit investor sentiment after three European governments were forced to help struggling lenders. [ID:nLU302379]
 The biggest contributors to the index’s drop included Royal Bank of Canada (RY.TO), down 3.8 percent at C$35.58, and Manulife Financial (MFC.TO), which dropped 7 percent to C$13.96. The broader financials group fell 4.6 percent.
 “The fact that (U.S. auto companies) have been unable to come up with a satisfactory restructuring plan points to what is being perceived as more systemic problems within the industry,” said Michael Sprung, president at Sprung & Co. Investment Counsel.
 Sprung said worries over the possible bankruptcy of the automakers spilled over into broader fears over the potential impact on the U.S. economy.
 As well, the market is also seeing the big auto bailouts as “turning into somewhat of a black hole for taxpayers’ money,” he added.
 At 9:51 a.m. (1351 GMT), the S&P/TSX composite index .GSPTSE was down 255.49 points, or 2.9 percent, at 8,565.57, with all of the 10 main groups in the red.
 The index ended lower on Friday, rattled by a drop in commodity prices, but for last week the index was still up 3.7 percent, its third straight week of gains.
 The big energy sector dropped 4.4 percent as the price of crude fell below $50 a barrel, pressured by a stronger U.S. dollar and a slump in global stock markets. [ID:nSYD421224] Suncor Energy (SU.TO) dropped 4.4 percent to C$28.06, and Canadian Natural Resources (CNQ.TO) fell 4.5 percent to C$49.20.
 The consumer discretionary sector fell 3.3 percent, while consumer staples fell 1.3 percent.
 Rising gold prices helped support gold miner Yamana Gold (YRI.TO), up 2.6 percent at C$11.59, and Agnico Eagle (AEM.TO), which rose 1.8 percent to C$71.06. The broader materials group, home to mining and fertilizer companies, was down 0.2 percent.
 ($1=$1.25 Canadian)  (Reporting by Jennifer Kwan; editing by Peter Galloway)   

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