October 9, 2008 / 1:40 PM / 9 years ago

Toronto stocks dive amid confidence crisis

TORONTO (Reuters) - The main index of the Toronto Stock Exchange plunged almost 5 percent on Thursday as mounting gloom over the state of the economy and the U.S. financial sector sent investors fleeing the market in a broad rout.

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

The financial sector was the biggest drag on the benchmark, sliding 7.74 percent. The energy and materials groups -- the other two pillars that buttress the Toronto market -- failed to lend support, shedding 5.03 percent and 2.47 percent, respectively.

It was the latest in a string of sessions in which the index has seesawed higher and lower before settling deep in the red. The depressed climate signals investors are doubtful that recent moves by authorities around the world to resuscitate the credit markets will be enough to avoid a recession.

“This is a continuing loss of confidence,” said Adrian Mastracci, portfolio manager and president at KCM Wealth Management Inc. “It’s like the parachute’s not opening.”

The S&P/TSX composite index fell 456.13 points, or 4.54 percent, to close at 9,600.18.

The S&P/TSX 60 index of Canadian blue chips fell 5.05 percent to 580.56.

All but one of the 10 main subgroups of the main index moved lower. Utilities eked out a gain of 0.06 percent.

“We’ve got this big flood ... and it doesn’t matter whether you’re a financial, doesn’t matter if you’re an oil or a commodity, you’re just in the way and you just get swept up in it,” Mastracci said.

The top losers of the day included financial heavyweights such as Canadian Imperial Bank of Commerce, which gave up 9 percent to finish at C$50.50. Insurer Sun Life Financial fell 14 percent to C$27.55, its lowest level since mid-2003.

Manulife, another big insurance house, fell to its lowest level since late 2005, sliding 11.4 percent to close at C$30.24.

“The market has basically fallen into the hands of speculators and day traders ... it’s driving legitimate investors out of the market and leaving the speculators to play freely,” said David Cockfield, senior vice-president at Leon Frazer & Associates in Toronto.

BlackBerry maker Research In Motion bucked the trend, adding 5.4 percent to finish at C$67.65. However, some analysts are starting to speculate whether the recent plunge in its share price could lead to a takeover bid.

In the United States, the losses were even more pronounced as the Dow Jones industrial average fell 678.91 points, or 7.33 percent, to finish at 8,579.19. The tech-heavy Nasdaq fell 5.47 percent to end at 1,645.12.

($1=$1.15 Canadian)

Additional reporting by Lynne Olver; editing by Peter Galloway

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