September 22, 2011 / 7:24 PM / 6 years ago

CANADA STOCKS-TSX drops 4 pct on global recession fears

   * TSX down 448.92 points, or 3.76 pct, to 11,448.92.
 * Index touches lowest level since July 2010
 * All 10 main sectors lower; materials, energy weigh
 (Updates to afternoon, adds fresh comments)
  By Trish Nixon
  TORONTO, Sept 22 (Reuters) - Toronto's main stock market
fell more than 4 percent on Thursday to hit its lowest level
since July, 2010, as a grim economic outlook from the U.S.
Federal Reserve and weak data from China stoked fears of a
global recession.
 Wall Street was down more than 3 percent, European stocks
fell more than 4 percent to a two-year low, and the U.S. dollar
rose to a seven-month high against major currencies as risk
aversion gripped global markets. [MKTS/GLOB]
 "It sure smells a little bit like panic," said Levente
Mady, market strategist at Union Securities, in Vancouver.   
"Going into the weekend it could be fairly hairy. I don't
really feel comfortable keeping a long position heading into
Friday and Monday here."
 The TSX's materials and energy groups each dropped about 6
percent, as commodity prices were pummeled.
 Data showing contraction in China's manufacturing sector
for a third straight month helped drive down oil prices by more
than 4 percent in London and sent the price of copper to a
one-year low. Gold, a traditional safe haven, slumped more than
3 percent as the dollar strengthened. [GOL/] [O/R] [MET/L]
 Barrick Gold ABX.TO was the heaviest drag on the index,
down 6.6 percent at C$50.05, followed by Suncor Energy SU.TO,
which dropped 7.3 percent to C$26.07. Potash Corp POT.TO lost
3.9 percent to C$48.43.
  At 2:51 p.m. (11851 GMT), the Toronto Stock Exchange's
S&P/TSX composite index .GSPTSE was down 448.92 points, or
3.76 pct, at 11,448.92.  Earlier, it sank as low as 11,445.05,
its weakest point since July 2010.
 The sell-off was widespread, with all 10 main index sectors
lower. Financials tumbled 3 percent, led by  Royal Bank of
Canada  RY.TO, down 3.4 percent at C$44.99 and
Toronto-Dominion Bank TD.TO, down 3.1 percent at C$69.93.
 "It doesn't matter what sector you look at, you're looking
at substantial drops in value here today. And I guess, given
the world situation, we probably knew something like this was
coming," said Fred Ketchen, director of equity trading at
 "There's fear, there's worry, there's talk about lack of
 Thursday's market meltdown came after weeks of worries that
Europe's debt crisis could freeze the global financial system,
and a day after the Federal Reserve disappointed markets with
its latest effort to boost the economy by lowering long-term
borrowing costs. The Fed also spooked investors with its stark
outlook for the U.S. economy.
 Mady said that with interest rates already at zero in the
U.S., there was little more that policy-makers could do to help
stimulate the economy and rally markets. He drew comparisons to
the Japanese economy, where interests rates have been at zero
percent for close to 20 years.
"When you get to zero percent, they can't help any more. you
might as well toss the Fed, all their governors and the rest,
into the trash bin because they are becoming irrelevant like
the bank of Japan did 20 years ago," he said.
"That means this market could be in trouble for a while."
 ($1=$1.03 Canadian)
 (Editing by Jeffrey Hodgson)

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